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WESTERN OKLAHOMA
STATE COLLEGE
June 30, 2010
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
AUDITED FINANCIAL STATEMENTS
Independent Auditors’ Report ................................................................................................................. 1
Management’s Discussion and Analysis ................................................................................................ 3
Statements of Net Assets ......................................................................................................................... 16
Statements of Revenues, Expenses, and Changes in Net Assets ....................................................... 17
Statements of Cash Flows ....................................................................................................................... 18
Notes to Financial Statements ................................................................................................................ 20
REPORT REQUIRED BY GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ..................................................... 48
REPORTS REQUIRED BY OMB CIRCULAR A-133
Independent Auditors’ Report on Compliance with Requirements Applicable to Each
Major Program and on Internal Control over Compliance in Accordance With OMB
Circular A-133 and on the Schedule of Expenditures of Federal Awards .................................... 50
Schedule of Expenditures of Federal Awards ...................................................................................... 53
Notes to Schedule of Expenditures of Federal Awards ...................................................................... 54
Schedule of Findings and Questioned Costs ........................................................................................ 55
Summary Schedule of Prior Audit Findings ........................................................................................ 57
Independent Auditors’ Report
Board of Regents
Western Oklahoma State College
Altus, Oklahoma
We have audited the accompanying statements of net assets of Western Oklahoma State College
(the “College”), a component unit of the State of Oklahoma, as of June 30, 2010 and 2009, and
the related statements of revenues, expenses, and changes in net assets and statements of cash
flows for the year then ended. These financial statements are the responsibility of the College’s
management. Our responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of the College’s discretely presented
component unit, the Western Oklahoma State College Foundation, Inc. Those financial
statements were audited by another auditor, whose report thereon has been furnished to us,
and in our opinion, insofar as they relate to the amounts included for the Foundation, are based
on the report of the other auditor.
We conducted our audits in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General for the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The financial statements of
the Foundation were audited by other auditors and were not audited in accordance with
Government Auditing Standards. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes,
assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit and
the report of the other auditor provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditor, the financial statements
referred to above present fairly, in all material respects, the respective financial position of
Western Oklahoma State College and its discretely presented component unit, Western
Oklahoma State College Foundation, Inc. as of June 30, 2010 and 2009, and the respective
changes in financial position and, where applicable, cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.
1
2
In accordance with Government Auditing Standards, we have also issued our report dated
October 5, 2010, on our consideration of the College’s internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the internal control over financial reporting and compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
Management’s Discussion and Analysis, as listed in the Table of Contents, is not a required part
of the basic financial statements, but is supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the supplementary information. However, we did not audit the
information and express no opinion on it.
Oklahoma City, Oklahoma
October 5, 2010
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis
Years Ended June 30, 2010, 2009 and 2008
3
The discussion and analysis of Western Oklahoma State College’s (the “College”) financial
statements provides an overview of the College’s financial activities for the year ended June 30,
2010. Since this management’s discussion and analysis is designed to focus on current activities
and currently known facts, please read it in conjunction with the College’s basic financial
statements and related footnotes.
FINANCIAL HIGHLIGHTS
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Invested In Capital
Assets
Restricted Unrestricted
Net Assets
2008
2009
2010
The following chart provides a graphical breakdown of total revenues by category for the fiscal
year ended June 30, 2010.
Total Revenues
Operating
Revenues
34%
Other Revenues
8%
Nonoperating
Revenues
58%
In fiscal year ended June 30, 2010, the College’s revenues exceeded expenses, creating an
increase in total net assets of $830,770, which represents a 4.91% increase from that reported in
2009. In Fiscal Year ended June 30, 2009, the College’s revenues exceeded expenses, creating an
increase in total net assets of $488,494, which represents a 2.98% increase from that reported in
2008.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
4
OVERVIEW OF THE FINANCIAL STATEMENTS AND FINANCIAL ANALYSIS
The annual report consists of three basic financial statements: the Statement of Net Assets, the
Statement of Revenues, Expenses, and Changes in Net Assets, and the Statement of Cash Flows.
The Statement of Net Assets and the Statement of Revenues, Expenses, and Changes in Net
Assets report information on the activities of the College as a whole. When revenues and other
support exceed expenses, the result is an increase in total net assets. When the reverse occurs,
the result is a decrease in total net assets. The relationship between revenues and expenses may
be thought of as the College’s operating results.
These two statements report the College’s net assets and changes in total assets. You can think of
the College’s net assets-the difference between assets and liabilities-as one way to measure the
College’s financial health, or financial position. Over time, increases or decreases in the College’s
net assets are an indicator of whether the financial health is improving or deteriorating. You
will need to consider many other non-financial factors, such as the trend and quality of student
applicants, freshman class size, student retention, condition of the buildings and safety of the
campus, to assess the overall health of the institution.
All assets and liabilities included in these two statements are presented using the accrual basis of
accounting, which is similar to the accounting used by most private-sector institutions. All of the
current year’s revenues and expenses are taken into account, regardless of when cash is received
or paid.
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE
The following table of the College’s net assets summarizes the major changes between years:
Increase Percent June 30 Increase Percent
2010 2009 (Decrease) Change 2008 (Decrease) Change
Current assets $ 4,879,078 $ 4,317,379 $ 561,699 13% $ 3,987,083 $ 330,296 8%
Noncurrent assets:
Restricted Cash and
Cash Equivalents 148,066 447,231 (299,165) -67% 645,668 (198,437) -31%
Receivable From
State Agency - 775,359 (775,359) -100% 4,242,733 (3,467,374) -82%
Capital assets, net 18,197,329 17,603,963 593,366 3% 14,014,921 3,589,042 26%
Other 986 1,380 (394) -29% 5,093 (3,713) -73%
Total assets 23,225,459 23,145,312 80,147 0% 22,895,498 249,814 1%
Current liabilities 1,131,482 1,686,469 (554,987) -33% 1,490,295 196,174 13%
Noncurrent liabilities: 4,355,256 4,550,892 (195,636) -4% 4,985,746 (434,854) -9%
Total liabilities 5,486,738 6,237,361 (750,623) -12% 6,476,041 (238,680) -4%
Net assets:
Investment in
capital assets 13,518,301 13,253,389 264,912 2% 12,641,713 611,676 5%
Restricted 143,291 - 143,291 100% 394,626 (394,626) -100%
Unrestricted 4,077,129 3,654,562 422,567 12% 3,383,118 271,444 8%
Total net assets $ 17,738,721 $ 16,907,951 $ 830,770 5% $ 16,419,457 $ 488,494 3%
June 30
Net Assets
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
5
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
The breakdown of operating revenues and expenses for fiscal years ended June 30, 2010, 2009
and 2008 are as follows:
Operating Revenues 2010
Other
Operating
5%
Auxilary
9%
State/Local
Grants
10%
Federal
Grants
20%
Tuition & Fees
56%
Operating Revenues 2009
Other
Operating
5%
Auxilary
9%
State/Local
Grants
10%
Federal
Grants
27%
Tuition &
Fees
49%
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
6
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Operating Revenues 2008
Other
Operating
6%
Auxilary
10%
State/Local
Grants
14%
Federal Grants
25%
Tuition & Fees
45%
Operating Expenses
0 1 2 3 4 5 6 7 8 9 10
Compensation
Contratcual
Supplies
Utilities
Communication
Other
Scholarships
Depreciation
$ in Millions
2008
2009
2010
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
7
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Year Ended
Increase Percent June 30 Increase Percent
2010 2009 (Decrease) Change 2008 (Decrease) Change
Operating revenues:
Tuition & Fees $ 3,046,070 $ 2,276,450 $ 769,620 34% 1,671,498 604,952 36%
Federal and state grants 1,612,957 1,751,226 (138,269) -8% 1,415,913 335,313 24%
Auxillary enterprise charges 483,724 440,531 43,193 10% 350,082 90,449 26%
Other 264,362 254,666 9,696 4% 200,933 53,733 27%
Total Operating Revenues 5,407,113 4,722,873 684,240 14% 3,638,426 1,084,447 30%
Less operating expenses 15,181,049 13,760,072 1,420,977 10% 12,650,204 1,109,868 9%
Net loss from operations (9,773,936) (9,037,199) (736,737) 8% (9,011,778) (25,421) 0%
Nonoperating revenues
(expenses):
State appropriations 5,378,308 5,819,608 (441,300) -8% 5,797,441 22,167 0%
State payments from federal ARR 437,693 - 437,693 100% - -
Federal grants and contracts 2,994,763 1,902,214 1,092,549 57% 1,733,779 168,435 10%
State & local grants and contranc 355,800 361,375 (5,575) -2% 353,542 7,833 2%
On-behalf
appropriations for OTRS 342,859 390,956 (48,097) -12% 397,720 (6,764) -2%
State Regents
Endowment Contributions 80,641 59,237 21,404 36% 57,767 1,470 3%
Interest Revenue 22,665 76,419 (53,754) -70% 297,099 (220,680) -74%
Interest Expense (227,689) (252,057) 24,368 -10% (265,535) 13,478 -5%
Net Nonoperating revenues 9,385,040 8,357,752 1,027,288 12% 8,371,813 (14,061) 0%
Other revenues, expenses,
and gains and losses
Capital grants and gifts 118,495 10,475 108,020 1031% 6,475 4,000 62%
State appropriations restricted
for capital purposes 467,266 467,266 - 0% 663,695 (196,429) -30%
On-behalf OCIA capital leases 633,905 690,200 (56,295) -8% 690,771 (571) 0%
Total Other 1,219,666 1,167,941 51,725 4% 1,360,941 (193,000) -14%
Increase in net assets 830,770 488,494 342,276 70% 720,976 (232,482) -32%
Net assets, beginning 16,907,951 16,419,457 488,494 3% 15,698,481 720,976 5%
Net assets, ending $ 17,738,721 $ 16,907,951 $ 16,419,457
Years Ended June 30
Revenues, Expenses and Changes in Net Assets
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
8
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
June 30, 2010 compared to June 30, 2009 resulted in the following revenue and expenditure
changes:
 Tuition & fees revenues increased by 33.81%. This increase is due to a combination of
several factors. Collections of prior year receivables exceeded management’s estimates by
approximately 7%, out-of-state waivers increased by $832,470 (due to a 95.59% increase in
out-of-state enrollment), and although tuition and fee rates did not increase over the FY 09
fiscal year, total enrollment increased 33.25%. Auxiliary revenues increased by 9.80%,
which represents an decrease of $17,742 in Residence Hall and an increase in student store
of $60,935. Federal Grants & Contracts experienced a decrease of -15.38%, which is mostly
due to the USDA grant that ended FY 09. The overall operating revenues increased by
14.49% over that of FY 09.
 Interest revenue and expense both declined this year. The interest revenue decreased by
70.34%, primarily caused by the decreased interest earnings received on the unexpended
2005 OCIA bond funds. These bond funds were fully spent by October 2009. The interest
earnings on the OCIA bond funds are restricted to the projects that these funds support.
The small decrease in the interest expense is attributed to the OCIA bond payments made
by OCIA on behalf of the College in the amount of $234,634, a decrease of $19,497 from the
prior year.
 The $108,020 increase in the Capital grants and gifts represents the income from two
congressionally directed grants that Western received in FY 2010 that were restricted to
capital expenditures. The funds were used for Nursing Program equipment needs and for
Safety and Security equipment needs on campus.
 The on-behalf contributions to Oklahoma Teacher’s Retirement System represent the
amount of dedicated state revenue from the State’s sales, use and income taxes that are
used as contributions to the Oklahoma Teacher’s Retirement Program (OTRS). For 2010,
the State of Oklahoma contributed 5% of the State’s General Revenue Fund to the OTRS on
behalf of participating employers. The College has estimated the amounts contributed to
the OTRS by the State on its behalf by multiplying the ratio of its covered salaries to total
covered salaries for the OTRS for the year by the applicable percentage of taxes collected
during the year. This amount was $342,859 for FY 2010 and $390,956 for FY 2009, which is
a 12.30% decrease, or $48,097.
 On-behalf capital lease payments decreased by 8.16%, or $56,295 less than previous year’s
numbers, which is the On-Behalf Payment for the interest and principal for the 1999 and
2005 OCIA bond issues.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
9
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
June 30, 2009 compared to June 30, 2008 resulted in the following revenue and expenditure
changes:
 Tuition & fees revenues increased by 32.69%. This increase is due to a combination of
several factors. Collections of prior year receivables exceeded management’s estimates by
approximately 10%, out-of-state waivers increased by $703,000 (due to a 58.97% increase in
out-of-state enrollment), tuition and fee rates increased by 8.6% over the FY 08 fiscal year
and total enrollment increased 12.39%. Auxiliary revenues increased by 25.84%, which
represents an increase of $19,196 in Residence Hall and an increase in student store of
$71,253. Federal Grants & Contracts experienced an increase of 25.84%, due to an increase
in U.S. Department of Agriculture Distance Leaning and Telemedicine Grant in the
amount of $358,000.
 Interest revenue and expense both declined in FY 2009. The interest revenue decreased by
74.28%, primarily caused by the interest earnings received on the unexpended 2005 OCIA
bond funds. This balance is decreasing as the funds are being spent on the bond projects.
The interest earnings on these funds are restricted to the projects that these funds support.
The small decrease in the interest expense is attributed to the OCIA bond payments made
by OCIA on behalf of the College in the amount of $254,131, a decrease of $11,404 from the
prior year.
 The 61% increase in capital grants and gifts is from new gifts to the library holdings.
 The on-behalf contributions to Oklahoma Teacher’s Retirement System represent the
amount of dedicated state revenue from the State’s sales, use and income taxes that are
used as contributions to the Oklahoma Teacher’s Retirement Program (OTRS). For 2009,
the State of Oklahoma contributed 5% of the State’s General Revenue Fund to the OTRS on
behalf of participating employers. The College has estimated the amounts contributed to
the OTRS by the State on its behalf by multiplying the ratio of its covered salaries to total
covered salaries for the OTRS for the year by the applicable percentage of taxes collected
during the year. This amount was $390,956 for FY 2009 and $397,720 for FY 2008, which is
a 1.70% decrease.
 On-behalf capital lease payments maintained at the previous year’s numbers, which is the
On-Behalf Payment for the interest and principal for the 1999 and 2005 OCIA bond issues.
Another way to assess the financial health of an institution is to look at the Statement of Cash
Flows. Its primary purpose is to provide relevant information about the cash receipts and cash
payments of an entity during a period. The Statement of Cash Flows also helps users assess an
entity’s ability to generate future net cash flows, its ability to meet its obligations as they come
due, and its needs for external financing.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
10
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Year Ended
Increase June 30 Increase
2010 2009 (Decrease) 2008 (Decrease)
Cash provided (used) by:
Operating activities $ (8,284,599) $ (7,712,749) $ (571,850) $ (7,008,010) $ (704,739)
Noncapital
financing activities 9,186,895 8,142,111 1,044,784 7,942,634 199,477
Capital and related (503,854) (684,350) 180,496 (972,426) 288,076
financing activities
Investing activities 22,665 76,419 (53,754) 297,099 (220,680)
Net increase in cash and
cash equivalents 421,107 (178,569) 599,676 259,297 (437,866)
Cash and cash equivalents,
beginning 3,746,256 3,924,825 (178,569) 3,665,528 259,297
Cash and cash equivalents,
ending $ 4,167,363 $ 3,746,256 $ 421,107 $ 3,924,825 $ (178,569)
Year Ended June 30
Cash Flows
June 30, 2010 compared to June 30, 2009 resulted in the following cash flow changes:
The College’s liquidity increased during the year. Cash used by operating activities increased
by approximately $572,000 while non-capital financing activities increased due an increase of
grants and contracts by approximately $1,045,000. Cash provided by investing activities
decreased by approximately $54,000, which is represented by a decrease in interest income as a
result of the interest earnings on the unexpended portion of the 2005 OCIA bond proceeds. The
net result of these items is an increase in cash by approximately $600,000.
June 30, 2009 compared to June 30, 2008 resulted in the following cash flow changes:
The College’s liquidity decreased during the year. Cash used by operating activities increased
by approximately $705,000. Non-capital financing activities increased due to a state
appropriations increase of approximately $22,000 and an increase in grants and contracts of
approximately $176,000. Cash provided by investing activities decreased by approximately
$221,000, which is represented by a decrease in interest income as a result of the interest
earnings on the unexpended portion of the 2005 OCIA bond proceeds. The net result of these
items is a decrease in cash by approximately $438,000.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
11
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Although the Statement of Revenues, Expenses, and Changes in Net Assets shows an increase
in total net assets of approximately $831,000, this is representative of all funds combined.
Management feels that it is important to point out the net change in fund balances for each
individual fund. This is displayed below.
2010 2009 2008
Educational and General Fund $ 482,513 $ 196,381 $ (170,544)
Auxiliary Fund (320,504) 347,758 (12,672)
Restricted Fund 201,736 (270,963) (296,087)
Unexpended Plant Fund 202,117 (388,450) 82,162
Capital Assets 264,908 603,768 1,118,117
Combined Total $ 830,770 $ 488,494 $ 720,976
Summary of Changes in Net Assets by Fund
Because of a deficit in the restricted funds, the Unrestricted Education and General Fund was
reduced by $12,135 in the College’s Statement of Net Assets in 2010. In 2009, because of deficits
in restricted funds, the Unrestricted Educational and General Fund was reduced by $272,695 in
the College’s Statement of Net Assets.
CAPITAL ASSETS AND DEBT ADMINISTRATION
CAPITAL ASSETS
At June 30, 2010, the College has approximately $18.2 million invested in capital assets, net of
accumulated depreciation of $11.8 million. Depreciation charges totaled approximately
$1,101,000 for the current fiscal year, compared to approximately $906,000 for the previous fiscal
year. Details of these assets for the three years are shown below.
2010 2009 2008
Land $ 212,345 $ 212,345 $ 212,345
Infrastructure 2,578,583 756,108 728,715
Land Improvements 993,141 877,035 837,707
Buildings 10,059,923 6,433,666 6,263,108
Furniture, Fixtures, and Equipment 2,643,712 2,400,057 2,301,642
Library Materials 1,709,625 1,807,186 1,871,621
Construction in Progress - 5,117,566 1,799,783
$ 18,197,329 $ 17,603,963 $ 14,014,921
Year Ended June 30
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
12
CAPITAL ASSETS AND DEBT ADMINISTRATION (Continued)
CAPITAL ASSETS (Continued)
Planned capital expenditures for fiscal year ending June 2011 will be budgeted and paid
primarily from Section 13 for the college academic programs. Throughout the year there will be
expenditures from other grant programs like Department of Education Congressionally
Directed Grants for campus safety and security and equipment for the Radiological Technology
Program, Title IV, TANF, and institutional reserve funds.
Section 13 for fiscal year 2011 will expend approximately $467,000 in new funds to include items
such as dorm debt retirement payment and Master Lease debt payment requirements -
$142,000; campus-wide computer technology equipment and software - $150,000; new computer
academic department requests - $50,000; physical plant upgrades for HVAC, carpet & vehicles -
$80,000; and $45,000 is undesignated at this time.
DEBT
At June 30, 2010, the College had $4,550,892 in debt outstanding, compared to $4,985,746
reported June 30, 2009 and $5,455,982 reported June 30, 2008. The table below summarizes
these amounts by type for the current year and the previous two years.
2010 2009 2008
OCIA 1999 Capital Lease Obligations $ - $ 10,705 $ 73,934
OCIA 2005 Capital Lease Obligations 4,458,892 4,847,458 5,220,298
ODFA 2007 Master Lease Obligations 92,000 127,583 161,750
$ 4,550,892 $ 4,985,746 $ 5,455,982
Year Ended June 30
Outstanding Debt
The Oklahoma Capital Bond Authority (OCIA) 1999 capital lease obligations provide that the
College is to make specified monthly payments to OCIA over 10 years. During the years ended
June 30, 2010, 2009 and 2008, OCIA made lease principal and interest payments on behalf of the
College totaling $11,240, $67,452 and $67,660, respectively. These on-behalf payments have
been recorded as restricted state appropriations in the College’s Statement of Revenues,
Expenses, and Changes in Net Assets.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
13
CAPITAL ASSETS AND DEBT ADMINISTRATION (Continued)
DEBT (Continued)
In November 2005, the OCIA issued its OCIA Bond Issue 2005F Series. Of the total bond
indebtedness, the State Regents for Higher Education allocated $6,000,000 to the College.
Concurrently with the allocation, the College entered into a lease agreement with OCIA for
projects being funded by the OCIA bonds. This lease agreement provides for the College to
make specified monthly payments to OCIA over 25 years. The proceeds of the bonds and
subsequent leases are to provide for capital improvements at the College. During the years
ended June 30, 2010, 2009 and 2008, OCIA made lease principal and interest payments on behalf
of the College totaling $622,665, $622,748 and $623,111, respectively.
More detailed information about the College’s outstanding debt is presented in Note E to the
financial statements.
WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.
Western Oklahoma State College Foundation, Inc. (the Foundation) is a legally separate tax-exempt
component unit of the College. The Foundation acts primarily as a fund-raising
organization to supplement the resources that are available to the College in support of its
programs. Although the College does not control the timing and amount of receipts from the
Foundation, the majority of resources, or income thereon, which the Foundation holds and
invests, is restricted to the activities of the College by the donors. Because these restricted
resources held by the Foundation can only be used by, or for the benefit of, the College, the
Foundation is considered a component unit for the College and is discretely presented in the
College’s financial statements.
The key components of the Foundation’s Net Assets are as follows:
2010 2009 2008
Unrestricted $ 809,916 $ 656,978 $ 649,367
Temporarily Restricted 260,243 292,367 311,691
Restricted 3,630,295 3,498,996 3,380,196
More detailed information on the Foundation can be found in the financial statements and in
Note J to the financial statements.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
14
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
The economic declines in the markets, bank failures, foreclosures, unemployment, auto industry
bailouts, etc., have all made for an uncertain future for Western, our state and nation. The
infusion of Federal Stimulus Funds has helped avoid an immediate emergency situation for
colleges and universities in Oklahoma, however, the long term economic future and
stabilization is still very uncertain once the stimulus dollars are no longer available.
Currently monthly targets in regard to receipt of state revenues are reaching the expectations of
the Office of State Finance. For the time being, Western and other institutions of Higher
Education have not been forced to take reductions to their FY 11 allocations. Although in FY 10
Western was unable politically to raise tuition, in FY 11 the restriction was raised with strong
urging to stay within a 5.5% tuition increase. Western’s Board of Regents voted to raise tuition
only by 3.2% to help alleviate the state reductions, at the same time holding the increase to the
student at a minimum. The additional stimulus funding will no longer be available for FY12
and it is likely that Western will have to request at least a minimal tuition increase.
In order to address the future declines in state revenues and the loss of stimulus dollars,
Western is aggressively seeking new revenue streams in three primary areas: (1) on-line course
offerings; (2) expanding the number of students participating in our athletic programs; and, (3)
expanding targeted academic programs that are in high demand areas, i.e. nursing.
On-line course offerings – Western has seen significant growth in providing on-line course
offerings throughout the year and especially during intersession when the demand appears
greatest. Western has expanded these offerings and services in a methodical method to meet
the demands at a pace that will not outpace the need. The intent of these expansions will be to
“fill the gap” with tuition and fee dollars from these on-line courses when the stimulus dollars
are no longer available and the likelihood of new additional state dollars are questionable.
Western has realized some substantial success in this area, with increases of almost 100% in our
out of state student FTE over previous year 2009. It is expected that our growth will begin to
level out in the upcoming years.
Expanding the number of students participating in our athletic programs – Western has
challenged our athletic coaches to enhance the quality and at the same time expand the number
of participants in our athletic programs. Additional scholarship dollars have been provided to
help Western coaches recruit quality athletes, increase the number participating, and compete
with other state institutions in number and size of scholarships. The increased number of
participants has been significant and the revenue generated through tuition and fees by those
additional students who participate in athletics is and will be significant in stabilizing the
income side of our budget.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
15
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE (Continued)
Expanding targeted academic programs that are in high demand areas, i.e. nursing - Western
will continue to seek revenue to help expand and, at least, maintain our current expansion of
our Registered Nursing program. With the conclusion of the Program of Excellence Grant, the
State Regents recognized the need to continue the off campus nursing programs that the
Program of Excellence Grant has supported for the past five years. This will have a significant
impact on Western’s ability to continue and/or expand this important program. Additional
grant dollars will be sought to solidify our current program and to seek new methods of
providing instruction and clinical training at different times and in different formats.
In conclusion, the overall economic outlook remains questionable especially in regard to state
allocations. Western is preparing itself to explore every opportunity to stabilize enrollments
and to acquire the necessary funding to move the institution forward.
STATEMENTS OF NET ASSETS
WESTERN OKLAHOMA STATE COLLEGE
Component Component
Unit Unit
WOSC WOSC
WOSC Foundation, Inc. WOSC Foundation, Inc.
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,019,297 $ 311,956 $ 3 ,299,025 $ 249,932
Interest receivable - 28,704 - 26,447
Accounts receivable, net of allowance
for doubtful accounts 666,369 - 800,439 -
Inventories 193,412 - 217,915 -
Total Current Assets 4,879,078 340,660 4,317,379 276,379
NONCURRENT ASSETS
Restricted cash and cash equivalents 148,066 - 447,231 -
Investments - 4,158,678 - 4,026,649
Receivable from state agency - - 775,359 -
Debt service reserve funds 986 - 1,380 -
Other assets - 85,000 - 85,000
Capital assets, net of accumulated
depreciation 18,197,329 1,269,948 17,603,963 1,318,792
Total noncurrent assets 18,346,381 5,513,626 18,827,933 5,430,441
TOTAL ASSETS 23,225,459 5,854,286 23,145,312 5,706,820
LIABILITIES
CURRENT LIABILITIES
Accounts payable 614,812 - 955,115 -
Accrued interest payable - 3,832 - 3,479
Deposits held in custody for others 41,763 - 22,316 -
Accrued payroll 79,070 - 51,982 -
Accrued compensated absences 71,078 - 80,637 -
Current portion of noncurrent liabilities 195,636 110,000 434,854 105,000
Lease premium, net 129,123 - 141,565 -
Total current liabilities 1,131,482 113,832 1,686,469 108,479
NONCURRENT LIABILITIES, net of current portion
Obligations under capital leases 4,355,256 - 4,550,892 -
Revenue bonds payable - 1,040,000 - 1,150,000
Total noncurrent liabilities 4,355,256 1,040,000 4,550,892 1,150,000
TOTAL LIABILITIES 5,486,738 1,153,832 6,237,361 1,258,479
NET ASSETS
Invested in capital assets, net of related debt 13,518,301 - 1 3,253,389 -
Restricted: - - - -
Expendable
Instruction, scholarships and other - 260,243 - 292,367
Capital projects 143,291 - - -
Nonexpendable - 3,630,295 - 3,498,996
Unrestricted 4,077,129 809,916 3,654,562 656,978
TOTAL NET ASSETS $ 17,738,721 $ 4 ,700,454 $ 16,907,951 $ 4,448,341
See notes to financial statements.
2010 2009
June 30, June 30,
16
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
WESTERN OKLAHOMA STATE COLLEGE
Component Component
Unit Unit
WOSC WOSC
WOSC Foundation, Inc. WOSC Foundation, Inc.
OPERATING REVENUES
Tuition and fees, net of scholarship discounts and
allowances of $3,886,000 and $2,522,000 at
June 30, 2010 and 2009, respectively $ 3,046,070 $ - $ 2,276,450 $ -
Federal grants and contracts 1,091,456 - 1,289,830 -
State and local grants and contracts 521,501 - 461,396 -
Student store, net of scholarship discounts and
allowances of $565,000 and $412,000 at
June 30, 2010 and 2009, respectively 410,426 - 349,491 -
Residence hall, net of scholarship discounts and
allowances of $93,000 and $101,000 at
June 30, 2010 and 2009, respectively 73,298 - 91,040 -
Other operating revenues 264,362 205,000 254,666 205,000
Contributions and donations - 442,630 - 378,808
Interest and dividend income - 96,689 - 164,022
Other investment income - 27,458 - -
Net realized and unrealized investment gains (losses) - 57,017 - (41,132)
TOTAL OPERATING REVENUES 5,407,113 828,794 4,722,873 706,698
OPERATING EXPENSES
Compensation and employee benefits 8,987,505 - 8,562,750 -
Contractual services 530,286 40,173 496,245 37,749
Supplies and materials 1,657,818 - 1,569,175 -
Utilities 448,107 2,513 448,880 1,087
Communication 61,029 - 59,475 -
Bond interest expense - 49,742 - 52,371
Other operating expenses 1,364,182 - 1,344,674 1,000
Scholarships and fellowships 1,031,237 435,409 373,358 458,560
Depreciation expense 1,100,885 48,844 905,515 48,844
TOTAL OPERATING EXPENSES 15,181,049 576,681 13,760,072 599,611
Net income (loss) from Operations (9,773,936) 252,113 (9,037,199) 107,087
Nonoperating revenues (expenses)
State appropriations 5,378,308 - 5,819,608 -
State payments from federal ARRA revenues 437,693 - - -
Federal grants and contracts 2,994,763 - 1,902,214 -
State and local grants and contracts 355,800 - 361,375
On-behalf contributions to Oklahoma Teachers'
Retirement System 342,859 - 390,956 -
Endowment contributions 80,641 - 59,237 -
Return on investments 22,665 - 76,419 -
Interest expense (227,689) - (252,057) -
Other nonoperating expenses - - - -
NET NONOPERATING REVENUES 9,385,040 - 8,357,752 -
Income (loss) before other revenues,
expenses, gains, or losses (388,896) 252,113 (679,447) 107,087
Capital grants and gifts 118,495 - 10,475 -
State appropriations restricted for capital purposes 467,266 - 467,266 -
On-behalf payments for OCIA capital leases 633,905 - 690,200 -
Increase in net assets 830,770 252,113 488,494 107,087
NET ASSETS, BEGINNING OF YEAR 16,907,951 4,448,341 16,419,457 4,341,254
NET ASSETS, END OF YEAR $ 17,738,721 $ 4,700,454 $ 16,907,951 $ 4,448,341
See notes financial statements.
2010 2009
Year Ended June 30, Year Ended June 30,
17
STATEMENTS OF CASH FLOWS
WESTERN OKLAHOMA STATE COLLEGE
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees $ 2,859,415 $ 2,235,203
Grants and contracts 1,846,067 1,528,926
Student store 411,616 339,985
Residence hall 73,298 91,040
Other operating receipts 411,097 225,350
Payments to employees for salaries and benefits (8,627,117) (8,173,050)
Payments to suppliers (5,258,975) (3,960,203)
NET CASH USED BY OPERATING ACTIVITIES (8,284,599) (7,712,749)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
State appropriations 5,378,308 5,819,608
State payments from federal ARRA revenues 437,693 -
Grants and contracts 3,350,563 2,263,589
Federal Family Education Loans received 2,053,923 1,934,893
Federal Family Education Loans disbursed (2,053,923) (1,934,893)
Gifts for other than capital purposes 20,331 58,914
NET CASH PROVIDED BY
NONCAPITAL FINANCING ACTIVITIES 9,186,895 8,142,111
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Cash paid for capital assets (1,705,793) (4,578,352)
Capital appropriations received 467,266 467,266
Interest paid on capital debt and leases (5,103) (6,471)
Proceeds from capital leases 775,359 3,467,374
Repayments of capital debt and leases (35,583) (34,167)
NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (503,854) (684,350)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 22,665 76,419
NET CASH PROVIDED BY INVESTING ACTIVITIES 22,665 76,419
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 421,107 (178,569)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,746,256 3,924,825
CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,167,363 $ 3,746,256
See notes to financial statements.
June 30
Year Ended
18
STATEMENTS OF CASH FLOWS--Continued
WESTERN OKLAHOMA STATE COLLEGE
2010 2009
RECONCILIATION OF NET OPERATING LOSS TO CASH
USED BY OPERATING ACTIVITIES
Net loss from operations $ (9,773,936) $ (9,037,199)
Adjustments to reconcile net operating loss to
net cash provided (used) by operating activities
Depreciation expense 1,100,885 905,515
Net loss on disposal of capital assets 130,037 94,272
On-behalf contributions to Oklahoma
Teachers' Retirement System 342,859 390,956
Changes in assets and liabilities
Accounts receivable 194,380 (302,369)
Inventories 24,503 (7,736)
Accounts payable and accrued
expenses (293,768) 236,484
Accrued compensated absences (9,559) 7,328
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (8,284,599) $ (7,712,749)
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO THE STATEMENTS OF NET ASSETS
Current assets
Cash and cash equivalents $ 4,019,297 $ 3,299,025
Noncurrent assets
Restricted cash and cash equivalents 148,066 447,231
$ 4,167,363 $ 3,746,256
NONCASH CAPITAL AND RELATED FINANCING ITEMS
On-behalf interest paid by OCIA $ 234,634 $ 254,131
Amortization of bond issuance cost 394 3,713
Amortization of lease premium (12,442) (12,258)
$ 222,586 $ 245,586
See notes to financial statements.
Year Ended
June 30
19
NOTES TO FINANCIAL STATEMENTS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
20
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations: Western Oklahoma State College (the “College”) is a two-year state
supported college, located in Altus, Oklahoma, operating under the jurisdiction of the Board of
Regents of Western Oklahoma State College and the Oklahoma State Regents for Higher
Education. The College is accredited by the North Central Association of Colleges and Schools.
The College is a component unit of the State of Oklahoma and is included in the general-purposes
financial statements of the State of Oklahoma.
Reporting Entity: The financial reporting entity, as defined by Governmental Accounting
Standards Board (“GASB”) Statement No. 14, The Financial Reporting Entity, includes the
accounts and funds of the College.
The Western Oklahoma State College Foundation, Inc. (the “Foundation”) is a legally separate
tax-exempt component unit of the College. The Foundation acts primarily as a fund-raising
organization to supplement the resources that are available to the College in support of its
programs. The eleven member board of trustees of the Foundation is self-perpetuating and
consists of nine rotating board members, one permanent trustee, and one non-voting exoficio
board member. Although the College does not control the timing and amount of receipts from
the Foundation, the majority of resources, or income thereon, that the Foundation holds and
invests are restricted to the activities of the College by the donors. Because these restricted
resources held by the Foundation can only be used by, or for the benefit of the College, the
Foundation is considered a component unit of the College and is discretely presented in the
College’s financial statements as required by GASB Statement No. 39, Determining Whether
Certain Organizations are Component Units.
During the years ended June 30, 2010 and 2009, respectively, the Foundation distributed
$257,216 and $267,407 in support to the College for both restricted and unrestricted purposes.
Complete financial statements for the Foundation can be obtained from Western Oklahoma
State College Foundation, Inc., 2801 North Main Street, Altus, Oklahoma 73521.
Financial Statement Presentation and Basis of Accounting: The College’s financial statements
are presented in accordance with the requirements of GASB Statement No. 34, Basic Financial
Statements and Management’s Discussion and Analysis for State and Local Governments, and GASB
Statement No. 35, Basic Financial Statements and Management’s Discussion and Analysis for Public
College and Universities. Under GASB Statements No. 34 and 35, the College is required to
present a statement of net assets classified between current and noncurrent assets and liabilities,
a statement of revenues, expenses and changes in net assets, with separate presentation for
operating and nonoperating revenues and expenses, and a statement of cash flows using the
direct method.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
21
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Financial Statement Presentation and Basis of Accounting--Continued: For financial reporting
purposes, the College is considered a special-purpose government engaged only in business-type
activities. Accordingly, the College’s financial statements have been presented using the
economic resources measurement focus and the accrual basis of accounting. Under the accrual
basis, revenues are recognized when earned, and expenses are recorded when an obligation has
been incurred. All significant intra-agency transactions have been eliminated.
The College has the option to apply all Financial Accounting Standards Board (“FASB”)
pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The
College has elected to not apply FASB pronouncements issued after the applicable date.
Cash Equivalents: For purposes of the statements cash flows, the College considers all highly
liquid investments with an original maturity of three months or less to be cash equivalents.
Funds invested through the State Treasurer’s Cash Management Program are considered cash
equivalents.
Deposits and Investments: The College accounts for its investments at fair value, as determined
by quoted market prices, in accordance with GASB Statement No. 31 Accounting and Financial
Reporting for Certain Investments and for External Investment Pools. In accordance with GASB
Statement No. 40, Deposit and Investment Risk Disclosures, the College has disclosed its deposit
and investment policies related to the risks identified in GASB Statement No. 40. Changes in
unrealized gains (losses) on the carrying value of the investments are reported as a component
of investment income in the statements of revenues, expenses, and changes in net assets.
Inventories: Inventories consist of books and supplies held for resale at the bookstore, which
are valued at the lower of cost (first-in, first-out basis) or market.
Accounts Receivable: Accounts receivable consists of tuition and fee charges to students and to
auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in
the State of Oklahoma. Student accounts receivable are carried at the unpaid balance of the
original amount billed to students, less an estimate made for doubtful accounts based on a review
of all outstanding amounts. Management determines the allowance for doubtful accounts by
identifying troubled accounts and by using historical experience applied to an aging of accounts.
Student accounts receivable are written off for financial reporting purposes when deemed
uncollectible.
Recoveries of student accounts receivable previously written off are credited to the allowance for
doubtful accounts when received.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
22
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Accounts Receivable--Continued: A student account receivable is considered to be past due if any
portion of the receivable balance is outstanding after the end of the semester.
Other receivables include amounts due from federal, state and local governments, or private
sources, in connection with reimbursement of allowable expenditures made pursuant to the
College’s grants and contracts. Other accounts receivable also include the distribution from the
Oklahoma State Regents’ endowment trust fund and amounts due from the Oklahoma Capital
Improvement Authority (“OCIA”) for proceeds from the capital bond improvement program
allocated to the College. No allowance for doubtful accounts has been provided for other
receivables.
Noncurrent Cash and Investments: Cash and investments that are externally restricted to make
debt service payments, maintain sinking or reserve funds, or to purchase capital or other
noncurrent assets, are classified as noncurrent assets in the statements of net assets.
Capital Assets: Capital assets are recorded at cost at the date of acquisition, or fair market value
at the date of donation in the case of gifts. For equipment, the College’s capitalization policy
includes all items with a unit cost of $500 or more, and an estimated useful life of greater than
one year. Renovation to buildings, infrastructure, and land improvements that significantly
increase the value or extend the useful life of the structure are capitalized. Routine repairs and
maintenance are charged to operating expense in the year in which the expense was incurred.
Depreciation is computed using the straight-line method over the estimated useful lives of the
assets, generally 50 years for buildings, 25-50 years for infrastructure and land improvements,
and 7 to 20 years for library materials and equipment.
Compensated Absences: Employee vacation pay is accrued when earned by employees. The
liability and cost incurred during the year are recorded as accrued expenses in the statements of
net assets and compensation expense in the statements of revenues, expenses, and change in net
assets.
Noncurrent Liabilities: Noncurrent liabilities include principal amounts of capital lease
obligations with contractual maturities greater than one year.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
23
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Net Assets: The College’s net assets are classified as follows:
Invested in capital assets, net of related debts: This represents the College’s total investment
in capital assets, net of outstanding debt obligations related to those capital assets. To the
extent debt has been incurred but not yet expended for capital assets, such amounts are not
included as a component of invested in capital assets, net of related debt.
Restricted-expendable: Restricted expendable net assets include resources in which the
College is legally or contractually obligated to spend resources in accordance with restriction
imposed by external third parties.
Unrestricted: Unrestricted net assets represent resources derived from student tuition and
fees, state appropriations, and sales and services of educational departments and auxiliary
enterprises. These resources are used for transactions relating to the educational and general
operations of the College, and may be used for discretion of the governing board to meet
current expenses for any purpose. These resources also include auxiliary enterprises, which
are substantially self-supporting activities that provide services for students, faculty and staff.
The College’s unrestricted net assets were designated for the following purposes at June 30:
2010 2009
Educational and general operations $ 2,324,295 $ 1,581,224
Auxiliary enterprises and other operating activities 1,752,834 2,073,338
Total unrestricted net assets $ 4,077,129 $ 3,654,562
When an expense is incurred that can be paid using either restricted or unrestricted resources,
the College’s policy is to first apply the expense toward restricted resources, and then toward
unrestricted resources.
Classification of Revenues: The College has classified its revenues as either operating or
nonoperating revenues according to the following criteria:
Operating Revenues: Operating revenues include activities that have the characteristics of
exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and
allowances, (2) sales and services of auxiliary enterprises, net of scholarship discounts and
allowances, and (3) certain federal, state and local grants and contracts.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
24
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Classification of Revenues--Continued:
Nonoperating revenues: Nonoperating revenues include activities that have the
characteristics of nonexchange transactions, such as gifts and contributions, student aid
revenues, and other revenue sources that are defined as nonoperating revenues by GASB
Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and
Governmental Entities That Use Proprietary Fund Accounting, and GASB Statement No. 34,
such as state appropriations and investment income.
Scholarship Discounts and Allowances: Student tuition and fee revenues, and certain other
revenues from students, are reported net of scholarship discounts and allowances in the
statements of revenues, expenses, and changes in net assets. Scholarship discounts and
allowances are the difference between the stated charge for goods and services provided by the
College, and the amount that is paid by students and/or third parties making payments on the
students’ behalf. Certain governmental grants, such as Pell grants, and other federal, state or
nongovernmental programs, are recorded as nonoperating revenues in the College’s financial
statements. To the extent that revenues from such programs are used to satisfy tuition and fees
and other student charges, the College has recorded a scholarship discount and allowance.
Income Taxes: The College, as a political subdivision of the State of Oklahoma, is exempt from
federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. However,
the College may be subject to income taxes or unrelated business income under Internal Revenue
Code Section 511(a)(2)(b).
Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The significant estimates used in the
preparation these financial statements include the depreciation of capital assets and the
allowance for doubtful accounts for accounts receivable.
Reclassification: Certain amounts in the 2009 financial statements have been reclassified to
conform to the current year presentation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
25
NOTE B--DEPOSITS AND INVESTMENTS
Custodial Credit Risk - Deposits: Custodial credit risk is the risk that in the event of a bank
failure, the College’s deposits may not be returned or the College will not be able to recover
collateral securities in the possession of an outside party. Generally, the College deposits its
funds with the Office of the State Treasurer (“OST”) and those funds are pooled with funds of
other state agencies and then, in accordance with statutory limitations, are placed in financial
institutions or invested as the OST may determine, in the states’ name. State statutes require the
OST to ensure that all state funds are either insured by Federal Deposit Insurance, collateralized
by securities held by the cognizant Federal Reserve Bank, or invested in U.S. government
obligations. The OST’s responsibilities include receiving and collateralizing the deposit of State
funds, investing State funds in compliance with statutory requirements, and maintaining
adequate liquidity to meet the cash flow needs of the State and all its funds and agencies. If the
College deposits funds directly with financial institutions, those funds must be insured by
Federal Deposit Insurance or collateralized by securities held by the cognizant Federal Reserve
Bank in the College’s name. Some deposits with the OST are placed in the OST’s internal
investment pool OK INVEST. OK INVEST pools the resources of all state funds and agencies
and invests them in (a) U.S. treasury securities which are explicitly backed by the full faith and
credit of the U.S. government; (b) U.S. agency securities which carry an implicit guarantee of the
full faith and credit of the U.S. government; (c) money market mutual funds which participants
in investments, either directly or indirectly, in securities issued by the U.S. treasury and/or
agency and repurchase agreements relating to such securities; and (d) investments related to tri-party
repurchase agreements which are collateralized at 102% and, whereby, the collateral is
held by a third party in the name of OST.
At June 30, 2010 and 2009, the carrying amounts of all College deposits with the OST were
$4,167,363 and $3,746,256 respectively. Of funds on deposit with the OST, amounts invested in
OK INVEST total $595,262 in 2010 and $757,401 in 2009.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
26
NOTE B--DEPOSITS AND INVESTMENTS--Continued
For financial reporting purposes, deposits with the OST that are invested in OK INVEST are
classified as cash equivalents. The distribution of deposits in OK INVEST are as follows:
Cost Market Value
U.S. agency securities $ 228,080 $ 231,910
Money market mutual fund 52,104 52,104
Certificates of Deposit 33,857 33,858
Tri-party repurchase agreements 38,175 38,174
Mortgage Backed Agency Securities 210,591 219,741
Municipal Bonds 12,826 13,752
Foreign Bonds 2,386 2,359
U.S. treasury obligations 17,243 18,252
Totals $ 595,262 $ 610,150
OK INVEST Portfolio
At June 30, 2010
Cost Market Value
U.S. agency securities $ 333,338 $ 343,327
Money market mutual fund 59,717 59,717
Certificates of Deposit 48,272 48,272
Tri-party repurchase agreements 59,161 59,161
Mortgage Backed Agency Securities 171,743 173,824
Municipal Bonds 12,180 12,280
Foreign Bonds 1,443 1,443
U.S. treasury obligations 71,547 74,047
Totals $ 757,401 $ 772,071
OK INVEST Portfolio
At June 30, 2009
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
27
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Agencies and funds that are considered to be part of the State’s reporting entity in the State’s
Comprehensive Annual Financial Report are allowed to participate in OK INVEST. Oklahoma
statues and the OST establish the primary objectives and guidelines governing the investment
of funds in OK INVEST. Safety, liquidity, and return on investment are the objectives which
establish the framework for the day to day OK INVEST management with an emphasis on
safety of the capital and the probable income to be derived and meeting the State and it’s funds
and agencies’ daily cash flow requirements. Guidelines in the Investment Policy address credit
quality requirements, diversification percentages and specify the types and maturities of
allowable investments, and the specifics regarding these policies can be found on the OST
website at http://www.treasurer.state.ok.us/. The State Treasurer, at his discretion, may
further limit or restrict such investments on a day to day basis. OK INVEST includes a
substantial investment in securities with an overnight maturity as well as in U.S. government
securities with a maturity of up to ten years. OK INVEST maintains an overall weighted
average maturity of less than two years. Participants in OK INVEST maintain an interest in its
underlying investments and, accordingly, may be exposed to certain risks. As stated in the OST
information statement, the main risks are interest rate risk, credit/default risk, liquidity risk,
and U.S. government securities risk. Interest rate risk is the risk that during periods of rising
interest rates, the yield and market value of the securities will tend to be lower than prevailing
market rates; in periods of falling interest rates, the yield will tend to be higher. Credit/default
risk is the risk that an issuer or guarantor of a security, or a bank or other financial institution
that has entered into a repurchase agreement, may default on its payment obligations.
Liquidity risk is the risk that OK INVEST will be unable to pay redemption proceeds within the
stated time period because of unusual market conditions, an unusually high volume of
redemption requests, or other reasons. U.S. Government securities risk is the risk that the U.S.
government will not provide financial support to U.S. government agencies, instrumentalities
or sponsored enterprises if it is not obligated to do so by law. Various investment restrictions
and limitations are enumerated in the State Treasurer’s Investment Policy to mitigate those
risks; however, any interest in OK INVEST is not insured or guaranteed by the State of
Oklahoma, the Federal Deposit Insurance Corporation or any other government agency.
Interest Rate Risk: At June 30, 2010, the College does not have any investments. The College
does not have a formal policy that limits investment maturities as a means of managing its
exposure to fair value losses arising from increasing interest rates.
Concentration of Credit Risk: The College places no limit on the amount the College may invest
in any one issuer. However, the majority of the investments are in mutual funds and
investments guaranteed by the U.S. Government.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
28
NOTE C--ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at June 30:
2010 2009
Student tuition and fees $ 715,188 $ 528,531
Auxillary enterprises and other operating activities 30,568 31,759
Contributions and gifts 115,406 55,096
Federal, state, and private grants and contracts 318,530 551,640
1,179,692 1,167,026
Less allowance for doubtful accounts (513,323) (366,587)
Accounts receivable, net of allowance
for doubtful accounts $ 666,369 $ 800,439
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
29
NOTE D--CAPITAL ASSETS
Following are the changes in capital assets for the years ended June 30, 2010 and 2009:
Beginning Ending
Balance Additions Transfers Retirements Balance
Capital assets not being depreciated
Land $ 212,345 $ - $ - $ - $ 212,345
Construction-in-progress 5,117,566 664,632 (5,782,198) - -
Total capital assets not being
depreciated $ 5,329,911 $ 664,632 $ (5,782,198) $ -$ 212,345
Other capital assets
Non-major infrastructure networks $ 1,170,187 $ 85,361 $ 1,798,189 $ - $ 3,053,737
Land improvements 1,720,796 22,225 144,108 - 1,887,129
Buildings 11,536,263 95,795 3,839,901 - 15,471,959
Furniture, fixtures, and equipment 6,807,641 915,754 - (285,227) 7,438,168
Library materials 2,014,835 40,521 - (105,673) 1,949,683
Total other capital assets 23,249,722 1,159,656 5,782,198 (390,900) 29,800,676
Less accumulated depreciation
Non-major infrastructure networks 414,079 61,075 - - 475,154
Land improvements 843,761 50,227 - - 893,988
Buildings 5,102,597 309,439 - - 5,412,036
Furniture, fixtures and equipment 4,407,584 647,735 - (260,863) 4,794,456
Library materials 207,649 32,409 - - 240,058
Total accumulated depreciation 10,975,670 1,100,885 - (260,863) 11,815,692
Other capital assets, net $ 12,274,052 $ 58,771 $ 5,782,198 $ (130,037) $ 17,984,984
Capital asset summary
Capital assets not being depreciated $ 5,329,911 $ 664,632 $ (5,782,198) $ - $ 212,345
Other capital assets 23,249,722 1,159,656 5,782,198 (390,900) 29,800,676
Total capital assets 28,579,633 1,824,288 - (390,900) 30,013,021
Less accumulated depreciation 10,975,670 1,100,885 - (260,863) 11,815,692
Capital assets, net $ 17,603,963 $ 723,403 $ -$ (130,037) $ 18,197,329
Year Ended June 30, 2010
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
30
NOTE D--CAPITAL ASSETS--Continued
Beginning Ending
Balance Additions Transfers Retirements Balance
Capital assets not being depreciated
Land $ 212,345 $ - $ - $ - $ 212,345
Construction-in-progress 1,799,783 3,692,287 (374,504) - 5,117,566
Total capital assets not being
depreciated $ 2,012,128 $ 3,692,287 $ (374,504) $ -$ 5,329,911
Other capital assets
Non-major infrastructure networks $ 1,119,390 $ 37,106 $ 13,691 $ - $ 1,170,187
Land improvements 1,637,895 54,651 28,250 - 1,720,796
Buildings 11,134,980 68,720 332,563 - 11,536,263
Furniture, fixtures, and equipment 6,336,697 683,248 - (212,304) 6,807,641
Library materials 2,049,195 52,817 - (87,177) 2,014,835
Total other capital assets 22,278,157 896,542 374,504 (299,481) 23,249,722
Less accumulated depreciation
Non-major infrastructure networks 390,675 23,404 - - 414,079
Land improvements 800,188 43,573 - - 843,761
Buildings 4,871,872 230,725 - - 5,102,597
Furniture, fixtures and equipment 4,035,055 577,738 - (205,209) 4,407,584
Library materials 177,574 30,075 - - 207,649
Total accumulated depreciation 10,275,364 905,515 - (205,209) 10,975,670
Other capital assets, net $ 12,002,793 $ (8,973) $ 374,504 $ (94,272) $ 12,274,052
Capital asset summary
Capital assets not being depreciated $ 2,012,128 $ 3,692,287 $ (374,504) $ - $ 5,329,911
Other capital assets 22,278,157 896,542 374,504 (299,481) 23,249,722
Total capital assets 24,290,285 4,588,829 - (299,481) 28,579,633
Less accumulated depreciation 10,275,364 905,515 - (205,209) 10,975,670
Capital assets, net $ 14,014,921 $ 3,683,314 $ -$ (94,272) $ 17,603,963
Year Ended June 30, 2009
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
31
NOTE D--CAPITAL ASSETS--Continued
The cost and related accumulated depreciation of assets held under capital lease obligations was
as follows at June 30,
Land Construction
Buildings Equipment Improvements in Progress Total
Cost $ 3 ,524,754 $ 1,167,520 $ 1,692,189 $ 761,047 $ 7,145,510
Less accumulated
depreciation 9 9,631 682,657 33,844 108,160 924,292
$ 3 ,425,123 $ 484,863 $ 1,658,345 $ 652,887 $ 6,221,218
2010
Land Construction
Buildings Equipment Improvements in Progress Total
Cost $ 1 82,100 $ 1,167,520 $ 647,650 $ 4,521,161 $ 6,518,431
Less accumulated
depreciation 2 9,136 565,298 77,718 - 672,152
$ 1 52,964 $ 602,222 $ 569,932 $ 4,521,161 $ 5,846,279
2009
NOTE E--NONCURRENT LIABILITIES
Noncurrent liability activity for the College was as follows for the years ended June 30:
Balance at Balance at Amounts
June 30, June 30, Due Within
2009 Additions Reductions 2010 One Year
Capital lease obligations
OCIA 1999 capital lease obligations $ 10,705 $ - $ (10,705) - $ -
OCIA 2005F capital lease obligations 4,847,458 - (388,566) 4,458,892 158,469
ODFA 2007 master lease obligations 127,583 - (35,583) 92,000 37,167
Total capital lease obligations 4,985,746 - (434,854) 4,550,892 195,636
Other noncurrent obligations
Compensated absences 80,637 119,667 (129,226) 71,078 71,078
Total noncurrent liabilities $ 5,066,383 $ 119,667 $ (564,080) $ 4,621,970 $ 266,714
2010
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
32
NOTE E--NONCURRENT LIABILITIES--Continued
Balance at Balance at Amounts
June 30, June 30, Due Within
2008 Additions Reductions 2009 One Year
Capital lease obligations
OCIA 1999 capital lease obligations $ 73,934 $ - $ (63,229) $ 10,705 $ 10,705
OCIA 2005F capital lease obligations 5,220,298 - (372,840) 4,847,458 388,566
ODFA 2007 master lease obligations 161,750 - (34,167) 127,583 35,583
Total capital lease obligations 5,455,982 - (470,236) 4,985,746 434,854
Other noncurrent obligations
Compensated absences 73,309 122,914 (115,586) 80,637 80,637
Total noncurrent liabilities $ 5,529,291 $ 122,914 $ (585,822) $ 5,066,383 $ 515,491
2009
Oklahoma Capital Improvement Authority Lease Obligations: In September 1999, the
Oklahoma Capital Improvement Authority (“OCIA”) issued its OCIA Bond Issues, 1999 Series
A, B and C. Of the total bond indebtedness, the State Regents for Higher Education allocated
$500,000 to the College. Concurrently with the allocation, the College entered into three
individual lease agreements with OCIA, representing the three projects being funded through
the OCIA bonds. Each of the agreements provides for the College to make specified monthly
payments to OCIA over 10 years. The proceeds of the bonds and subsequent leases are to
provide for capital improvements at the College. This obligation was repaid in full during the
fiscal year ended June 30, 2010.
In November 2005, the OCIA issued its OCIA Bond Issue 2005F Series. Of the total bond
indebtedness, the State Regents for Higher Education allocated $6,000,000 to the College.
Concurrently with the allocation, the College entered into a lease agreement with OCIA for
projects being funded by the OCIA bonds. Each of the agreements provides for the College to
make specified monthly payments to OCIA over 10 years. The proceeds of the bonds and
subsequent leases are to provide for capital improvements at the College.
During the years ended June 30, 2010 and 2009, OCIA made principal and interest payments
totaling $633,905 and $690,200, respectively, on behalf of the College. These on-behalf payments
have been recorded as restricted state appropriations in the College’s statements of revenues,
expenses, and changes in net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
33
NOTE E--NONCURRENT LIABILITIES--Continued
Oklahoma Development Finance Authority Master Lease Program: In 2007, the Oklahoma
Development Finance Authority (“ODFA”) issued the Oklahoma State System of Higher
Education Master Lease Revenue Bonds, Series 2007. Of the total bond indebtedness, the State
Regents for Higher Education allocated $181,000 to the College. The proceeds of the bonds are
to provide for capital improvements at the College.
Future minimum lease payments related to the College’s obligations under its various capital
lease obligations are as follows:
Year Ending June 30: Prinicpal Interest Total
2011 $ 195,636 $ 221,637 $ 417,273
2012 203,837 213,397 417,234
2013 188,151 204,438 392,589
2014 180,065 195,986 376,051
2015 188,877 187,493 376,370
2016-2020 921,048 808,333 1,729,381
2021-2025 1,174,715 554,710 1,729,425
2026-2030 1,498,563 230,816 1,729,379
Total $ 4,550,892 $ 2,616,810 $ 7,167,702
NOTE F--RETIREMENT PLAN
The College’s academic and nonacademic personnel are covered by the Oklahoma Teachers’
Retirement System, which is a State of Oklahoma public employees retirement system. The
College does not maintain the accounting records, hold the investments for, or administer this
plan.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
34
NOTE F--RETIREMENT PLAN--Continued
Oklahoma Teachers’ Retirement System
Plan Description: The College contributes to the Oklahoma Teachers’ Retirement System
(“OTRS”), a cost-sharing multiple-employer defined benefit pension plan sponsored by the
State of Oklahoma. OTRS provides defined retirement benefits based on members’ final
compensation, age and term of service. In addition, the retirement plan provides for benefits
upon disability and to survivors upon the death of eligible members. The benefit provisions
are established and may be amended by the legislature of the State of Oklahoma. Title 70 of the
Oklahoma Statutes, Sections 17-101 through 17-120, assigns the authority for management
and operation of the plan to the Board of Trustees of OTRS. The OTRS issues a publicly
available financial report that includes financial statements and supplementary information
for OTRS. That report may be obtained by writing to Teachers’ Retirement System of
Oklahoma, P.O. Box 53524, Oklahoma City, Oklahoma 73152, or by calling (405) 521-2387.
Funding Policy: The College is required to contribute a fixed percentage of annual
compensation on behalf of active members. The employer contribution rate of 9.5%, which
increased from 9% in January 2010, is applied to annual compensation, and is determined by
state statute. The contribution rate was 8.5%-9% in fiscal year 2009 and 8.35% in fiscal year 2008.
Employees’ contributions are also determined by state statute. For all employees, the
contribution rate was 7% of covered salaries and fringe benefits in 2010, 2009 and 2008,
respectively. These contributions were made directly by the College for 2010, 2009 and 2008.
The College’s contributions to the OTRS for the years ended June 30, 2010, 2009 and 2008
were approximately $971,000, $934,000 and $843,000, respectively. These contributions
included the College’s statutory contribution and the share of the employees’ contributions
paid directly by the College.
The State of Oklahoma is also required to contribute to the OTRS on behalf of the participating
employers. For 2010, the State of Oklahoma contributed 5% of state revenues from sales and
use taxes and individual income taxes, to the OTRS on behalf of participating employers.
The College has estimated the amounts contributed to the OTRS by the State of Oklahoma
on its behalf by multiplying the ratio of its covered salaries to total covered salaries for the
OTRS for the year by the applicable percentage of taxes collected during the year. For the
years ended June 30, 2010 and 2009, the total amounts contributed to the OTRS by the State of
Oklahoma on behalf of the College were approximately $343,000 and $391,000, respectively.
These on-behalf payments have been recorded as nonoperating revenues and operating
expenses in the statements of revenues, expenses, and changes in net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
35
NOTE G--FUNDS HELD IN TRUST BY OTHERS
Oklahoma State Regents’ Endowment Trust Funds
In connection with the Oklahoma State Regents’ Endowment Program (the “Endowment
Program”), funds are invested by the Oklahoma State Regents on behalf of the College. These
funds are not recognized in the College’s statement of net assets. At June 30, 2010 and 2009, the
funds totaled approximately $556,000 and $497,000, respectively. The College is entitled to
receive an annual distribution of earnings on these funds. Distributions to be received totaled
approximately $26,000 and $28,000 at June 30, 2010 and 2009, respectively.
NOTE H--RELATED PARTY TRANSACTIONS
The College is the beneficiary of the Western Oklahoma State College Foundation, Inc. (the
“Foundation”), which provides support for the College by way of scholarships and other direct
resources. The College contracts with the Foundation to provide limited services and office
space in exchange for the support the College receives. The College provides support to the
Foundation through employee services and office space.
In July 1998, the Foundation issued revenue bonds through the Jackson County Public Finance
Authority to construct a student housing facility (the “Housing Facility”) on property owned by
the College. Concurrently with the issuance of these bonds, the College entered into a Lease and
Development Agreement (the”Lease Agreement”) and an Operations and Maintenance
Agreement (the “Operation Agreement”). In connection with the Lease Agreement, the College
agreed to pay a development fee to the Foundation, and further agreed to rent the real property
upon which the Housing Facility was to be constructed. The term of the lease agreement was
for 50 years beginning July 1, 1998, and provided for the Foundation to pay the College $100 per
year in rent expense.
The Operation Agreement provided that the College would be responsible for the management
and operations of the Housing Facility, and in exchange for the services provided by the College
to the Foundation, the Foundation would pay the College the sum of $925 per semester for each
student residing in the Housing Facility. The Operations Agreement automatically renewed
each fiscal year but could be terminated by the College or the Foundation. In connection with
the Operations Agreement, the College’s Board of Regents had verbally agreed to incur the
expenses and debt service in excess of revenues collected. The agreement was reviewed
annually by the College, and was subject to Board approval for future years. Effective July 1,
2002, the Operations Agreement was terminated, as described below.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
36
NOTE H--RELATED PARTY TRANSACTIONS--Continued
Effective July 1, 2002, the College entered into a Student Housing Facility Lease Agreement (the
“Student Housing Lease Agreement”) with the Foundation. The Operations Agreement was
terminated as a result of this agreement. Under the Student Housing Lease Agreement, the
Foundation and the College agreed that the College would lease all of the Foundation’s rights
and interests in the Housing Facility for $205,000 per year. The initial lease term of the Student
Housing Lease Agreement was from July 1, 2002 through June 30, 2003. The College and the
Foundation must agree to future lease terms.
NOTE I--COMMITMENTS AND CONTINGENCIES
The College is exposed to various risks of loss from torts; theft of, damage to, and destruction of
assets; errors and omissions; employee injuries and illnesses; natural disasters; and employee
health, life, and accident benefits. Commercial insurance coverage is purchased for claims
arising from such matters other than torts, property, and workers’ compensation. Settled claims
have not exceeded this commercial coverage in any of the three preceding years.
The College, along with other state agencies and political subdivisions, participates in the State
of Oklahoma Risk Management Program and the state insurance fund entity risk pool currently
operating as a common risk management and insurance program for its members. The College
pays an annual premium to the pools for its torts, property, and workers’ compensation
insurance coverage. The Oklahoma Risk Management Pool’s (the “Pool”) governing agreement
specifies that the Pool will be self-sustaining through member premiums and will reinsure
through commercial carriers for claims in excess of specified stop-loss amounts.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
37
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.
The following are significant disclosures of the Foundation:
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations: Western Oklahoma State College Foundation, Inc., a nonprofit
organization, was formed in 1974 for the benefit of Western Oklahoma State College (the
College) in aid of charitable, benevolent educational, scientific and literary purposes.
The purposes of the Foundation are strengthened by the worthy accomplishments that are a
part of the history of the Foundation.
The role of the Foundation is to provide the financial support that will enable the College to
achieve expanded goals and fulfill higher purposes that otherwise are not possible on limited
funding.
The Foundation leaders recognize the potential for the Foundation and realize greater
support can be attained for the College as it reaches increasingly significant level of
educational leadership.
The Foundation seeks continuous support from individuals, business firms, corporations, civic
groups, foundations, service organizations and bequests of wills. As the Foundation grows,
the College educational programs grow. The Foundation provides a variety of opportunities
to share in the future development of the College and its continuing Commitment to Excellence.
Significant accounting and reporting policies applied in the preparation of the accompanying
financial statements are as follows:
Basis of Accounting: The Foundation uses the accrual basis of accounting, whereby revenues
are recognized when earned and expenses when incurred. Expenses incurred but not paid are
represented by a liability on the statement of financial position. Other revenues are recognized
when received or earned. Net assets represent the cumulative excess of revenues recognized
over expenses incurred.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
38
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--Continued
Financial Statement Presentation: The accompanying financial statements are presented in
accordance with Financial Accounting Standards Board (FASB) in its Statements of Financial
Accounting Standards (SFAS) No. 116, Accounting for Contributions Received and Contributions
Made, and Statement No. 117, Financial Statement for Not-for-Profit Organizations, which
requires the Foundation to report information regarding its financial position and activities
according to the three classes of net assets as follows:
Unrestricted net assets – Net assets that are not subject to donor imposed stipulations.
Temporarily restricted net assets – Net assets subject to donor imposed stipulations
that may or will be met, either by actions of the Foundation and/or the passage of
time. When a restriction expires, temporarily restricted net assets are reclassified to
unrestricted net assets.
Permanently restricted net assets – Net assets subject to donor imposed stipulations
that they be maintained permanently by the Foundation. The donors of these assets
permit the Foundation to use all or part of the income earned on any related
investments for general or specific purpose.
Investments: The Foundation has adopted SFAS No. 157, Fair Value Measurements with
respect to financial assets and liabilities. SFAS No.157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value measurements.
Fair value under SFAS No. 157 is defined as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. SFAS No. 157 establishes fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value into three broad levels, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs that are derived principally from or corroborated by observable
market data;
Level 3 – Inputs that are unobservable and significant to overall fair measurement.
Investments which are contributed to the Foundation are carried at their fair market value
at the time of donation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
39
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--Continued
Capital Assets: Capital assets are recorded at cost at the date of acquisition. Depreciation is
computed using the straight-line method over the estimated useful life of the asset, which is
generally 37.5 years for buildings.
Capital assets that are contributed to the Foundation are carried at their fair market value at
the time of the donation.
Statement of Cash Flows: In accordance with FASB Statement No. 95, Statement of Cash
Flows, as amended by FASB Statement No.17, the accompanying financial statements
include a statement of cash flows, which is presented using the direct method. For purposes
of the statements of cash flows, cash and cash equivalents include checking and time
deposits with maturities of 90 days or less.
Estimates: The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates, the significant
estimates used in the preparation of these financial statements are depreciation and the
allowance for investment revaluation.
Income Taxes: The Foundation is an organization exempt from income taxes under Section
501 (c) (3) of the Internal Revenue Code. As such, no provision has been made for federal or
state income taxes. Federal and State informational tax returns have been filed as required.
Concentration of Risk: The Foundation maintains its cash accounts and certificates of
deposit at several commercial banks. Cash accounts and certificates of deposit at each bank
are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 and
additional insurance to cover any of those amounts that may exceed the $250,000 FDIC
insurance.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
40
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--Continued
Evaluation of Subsequent Events: In May 2009, the FASB issued SFAS No. 165, Subsequent
Events. SFAS No. 165 established general standards of accounting for and disclosure of
events that occur after the statement of financial position date, but before financial
statements are issued or are available to be issued. SFAS No. 165 requires disclosure of the
date through which an entity has evaluated subsequent events and the basis for that date.
Accordingly, the Foundation adopted SFAS No. 165 as of June 30, 2010 and evaluated its
financial statement for subsequent events through August 19, 2010. The Foundation is not
aware of any such events which would require recognition or disclosure in the financial
statements.
NOTE B: WOSC STUDENT FACILITIES REVENUE BOND SERIES 2008
In July 1998, Western Oklahoma State College Foundation, Inc. (Foundation) entered into a
lease and development agreement with the Board of Regents of Western Oklahoma State
College (the Board) to lease a portion of the Western Oklahoma State College campus for the
purpose of constructing a student housing facility. The Board agreed to pay the
development fee of $150,000 in order to obtain the financing. In addition, the Board entered
into an operation and maintenance agreement whereby the Board agreed to operate and
maintain the student housing facility. In July 2002, the Board terminated the original
operation and maintenance agreement and entered into a lease agreement providing for an
annual lease of $205,000. The Board agreed to pay for all maintenance, utilities, insurance
and repairs necessary to operate the student housing facility.
In June 2008, the WOSC Student Facilities Revenue Bonds Series 1998 were retired with the
proceeds from the issue of the WOSC Student Facilities Revenue Bonds Series 2008 in the
amount of $1,360,000 with interest due on June 1 and December 1 and with principal payments
annually. The first principal and interest payments commenced on December 1, 2008.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
41
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE B: WOSC STUDENT FACILITIES REVENUE BOND SERIES 2008--Continued
The bonds mature during the fiscal year ending June 30, in the following manner:
Principal Interest Total
2011 $ 110,000 $ 45,977 $ 155,977
2012 115,000 42,127 157,127
2013 120,000 37,958 157,958
2014 120,000 33,478 153,478
2015 125,000 28,798 153,798
2016-2019 560,000 61,625 621,625
$ 1,150,000 $ 249,963 $ 1,399,963
NOTE C: CAPITAL ASSETS
Capital assets consist of the following at June 30:
2010 2009
Student housing facility $ 1,807,234 $ 1,807,234
Less accumulated depreciation (537,286) (488,442)
$ 1,269,948 $ 1,318,792
Depreciation expense included in the accompanying financial statements for the years
ended June 30, 2010 and 2009 was $48,844 each year.
NOTE D: INVESTMENTS AND ALLOWANCE FOR INVESTMENT LOSS
The Foundation has adopted Statement of Financial Accounting Standards (SFAS) No. 124,
Accounting for Certain Investments Held by Not-for-Profit Organizations. Under SFAS No. 124,
investments in marketable securities with readily determinable fair market values are
reported at their fair market value in the statement of net assets. Realized and unrealized
gains and losses are included in the statement of activities as gains or losses in market
revaluation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
42
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE D: INVESTMENTS AND ALLOWANCE FOR INVESTMENT GAIN (LOSS)--
Continued
Types of investments are as follows at June 30:
2010 2009
U.S. government agencies $ 3,497 $ 3,866
Certificates of deposits 2,789,172 2,689,870
Money market funds 36,660 472,078
Mutual funds 948,019 434,628
Annuities 251,000 251,000
Commercial paper - 101,894
Real estate investment trusts (REIT) 169,846 169,846
Total investments 4,198,194 4,123,182
Allowance for market revaluation (39,516) ( 96,533)
Fair market value (carrying value) $ 4,158,678 $ 4,026,649
NOTE E: ENDOWMENT DISCLOSURE
The Foundation’s endowment consists of 90 individual donor restricted funds which are
managed and controlled by the Foundation and were established for scholarships. As
required by generally accepted accounting principles, net assets associated with endowment
funds are classified and reported based on the existence or absence of donor imposed
restrictions. All of the endowment funds held by the Foundation are managed and
controlled by the Foundation in accordance with the following policies.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
43
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE E: ENDOWMENT DISCLOSURE--Continued
Interpretation Of Relevant Law (Continued)
The Board of Trustees of the Foundation have interpreted the State Prudent Management of
Institutional Funds Act (“SPMIFA”) as requiring the preservation of the fair value of the
original gift as of the gift date of the donor restricted endowment funds absent explicit
donor stipulations to the contrary. As a result of this interpretation, the Foundation
classifies as permanently restricted net assets: (a) the original value of the gifts donated to
the permanent endowment; (b) the original value of subsequent gifts to the permanent
endowment; and (c) accumulation to the permanent endowment made in accordance with
the direction of the applicable donor gift instrument at the time the accumulation is added
to the fund. The remaining portion of the donor restricted endowment fund that is not
classified in permanently restricted net asset is classified as temporarily restricted net assets
until those amounts are appropriated for expenditure by the Foundation in the manner
consistent with the standard of prudence prescribed by SPMIFA. In accordance with
SPMIFA, the Foundation considers the following factors in making a determination to
appropriate or accumulate donor restricted endowment funds.
(1) The duration and preservation of the funds;
(2) The purpose of the Foundation and donor restricted endowment fund;
(3) General economic conditions;
(4) Possible effect of inflation and deflation;
(5) The expected total return from income and appreciation of investments;
(6) Other resources of the Foundation;
(7) The investment policies of the Foundation;
Endowment net asset composition by type of funds as of June 30, 2010:
Temoprarily Permanently
Endowments Unrestricted Restricted Restricted Total
Donor restricted endowments $ - $ 260,243 $ 3,630,295 $ 3,890,538
Board designated endowments 663,142 - - 663,142
Total Funds Invested $ 6 63,142 $ 260,243 $ 3,630,295 $ 4,553,680
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
44
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE E: ENDOWMENT DISCLOSURE--Continued
Interpretation Of Relevant Law (Continued)
Changes in endowment net assets for the year ended June 30, 2010:
Unrestricted
Board Temporarily Permanently
Designated Restricted Restricted Total
Endowment net assets,
beginning of year $ 560,139 $ 292,367 $ 3,498,996 $ 4,351,502
Investment return
Investment income 11,829 93,103 12,415 117,347
Net realized and unrealized
gain on investments 57,017 - - 57,017
Total investment return 68,846 93,103 12,415 174,364
Contributions 34,157 113,060 118,884 266,101
Appropriation of endowment
assets for expenditure - (238,287) - (238,287)
Endowment net assets,
end of year $ 663,142 $ 260,243 $ 3,630,295 $ 4,553,680
Funds with Deficiencies
From time to time, the fair value of assets associated with individual donor restricted
endowment funds may fall below the level that donor or SPMIFA requires the Foundation
to retain as a fund of perpetual duration. In accordance with generally accepted accounting
principles, the allowance reported in unrestricted net assets which is a reduction in fair
market value of invested endowment funds is $39,516 and $96,533 at June 30, 2010 and 2009,
respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
45
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE E: ENDOWMENT DISCLOSURE--Continued
Return Objectivities and Risk Parameters
The Foundation has adopted investment and spending policies for endowment assets that
attempt to provide a predictable stream of funding to programs supported by its
endowments while seeking to maintain the purchasing power of the endowment assets.
Endowment assets include those assets of the donor restricted funds that the Foundation
must hold in perpetuity or for a donor specified period as well as board designated funds.
Under this policy, as approved by the Board of Trustees, the endowment assets are invested
with the primary objective of growth and a secondary objective of current income. The asset
allocation policies reflect and are consistent with the investment objectives and risk
tolerances expressed through the investment policy. These policies, developed after
examining the historical relationships of risk and return among asset classes, are designed to
provide the highest probability of meeting or exceeding the return objectives at the lowest
level of risk. Actual returns in any given year may vary from this amount.
Spending Policy
The Foundation has a policy of appropriating for distribution each year amounts up to, but
not to exceed actual investment performance for the year.
How The Investment Objectives Relate to the Spending Policy
Since the Foundation has a policy of designating unrestricted funds each year for
investment, it feels that this policy protects the purchasing power of the endowments. In
light of the current market fluctuations and the future needs of the Foundation, it evaluates
the spending policy annually to ensure that it remains in accordance with the long term
objectives of the Foundation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
46
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE F: FAIR VALUE MEASUREMENTS
The Foundation has no liabilities measured at fair value on a recurring basis. Assets measured
at fair value on a recurring basis are classified within the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
U.S. government agencies $ - $ 3,497 $ - $ 3,497
Certificates of deposit 2,804,469 - - 2,804,469
Money market funds 36,660 - - 36,660
Mutual funds 890,329 - - 890,329
Annuities 251,664 - - 251,664
Real estate investment trusts 172,059 - - 172,059
Investments $ 4,155,181 $ 3,497 $ - $ 4,158,678
Level 1 Level 2 Level 3 Total
U.S. government agencies $ - $ 3,866 $ - $ 3,866
Certificates of deposit 2,652,843 - - 2,652,843
Money market funds 472,078 - - 472,078
Mutual funds 388,592 - - 388,592
Annuities 251,905 - - 251,905
Commercial paper - 87,519 - 87,519
Real estate investment trusts 169,846 - - 169,846
Investments $ 3,935,264 $ 91,385 $ - $ 4,026,649
As Of June 30, 2010
As Of June 30, 2009
Following is a description of the methodologies used for instruments measured at fair value
on a recurring basis:
When quoted prices are available in an active market, securities are classified within Level 1
of the hierarchy. Investments classified as Level 1 include cash and cash equivalents,
common and preferred stocks, and mutual funds. Other investments, such as government
agency, corporate bonds, and municipal securities are classified within Level 2 of the
hierarchy and are independently valued by nationally recognized, third-party pricing
services, and provided by the investment manager to the Foundation. Certificates of
deposit values are based on yield curves, interest rates, and other relevant factors.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
47
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE G: SILVER STATUES
The Foundation maintains various silver statues. These statues are maintained for public
exhibition rather than financial gain. On June 30, 2010 and 2009, these statues had a value of
approximately $85,000. These statues are protected, kept unencumbered, cared for, and
preserved.
NOTE H: CONTRIBUTIONS AND DONATIONS
The following is a breakdown of the contributions and donations received in 2010 and their
respective categories by restriction:
Temoprarily Permanently
Contributions and donations Unrestricted Restricted Restricted Total
Endowments $ 4,238 $ 103,756 $ 111,137 $ 2 19,131
Sustaining membership account 18,010 - - 18,010
Pass through funds - 174,501 - 174,501
Presidents partners 23,241 - 7 ,747 30,988
Total contributions and donations $ 45,489 $ 278,257 $ 118,884 $ 442,630
As of June 30, 2010
NOTE K--ACCOUNTING STANDARDS ISSUED NOT YET ADOPTED
In 2010, GASB issued Statement No. 59, Financial Instruments Omnibus. GASB No. 59 provides
updates and improvements to existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools for which
significant issues have been identified in practice. The requirements of this Statement are
effective for financial statements for periods beginning after June 15, 2010. Earlier application in
encouraged. Management has determined that this Statement will have no effect on the
College’s financial condition or results of operations.
Independent Auditors’ Report on Internal Control Over
Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Board of Regents
Western Oklahoma State College
Altus, Oklahoma
We have audited the financial statement of Western Oklahoma State College (the “College”), a
component unit of the State of Oklahoma, as of and for the years ended June 30, 2010 and 2009,
and have issued our report thereon dated October 5, 2010. Our report was modified to include
a reference to other auditors. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial
audits in Government Auditing Standards, issued by the Comptroller General of the United States
of America. Other auditors audited the financial statements of the Western Oklahoma State
College Foundation, Inc. (the “Foundation”), the College��s discretely presented component
unit, as described in our report on the College’s financial statements. The financial statements
of the Foundation were not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the College’s internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the College’s internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of the College’s internal control
over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the College’s financial statements will not be
prevented, or detected and corrected on a timely basis.
48
49
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies
in internal control over financial reporting that might be deficiencies, significant deficiencies or
material weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the College’s financial statements are
free of material misstatements, we performed tests of compliance with certain provisions of
laws, regulations, contracts and grant agreements, and other matters, noncompliance with
which could have a direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance and other matters that are required to be reported
under Government Auditing Standards.
This report is intended solely for the use of the Board of Regents, management and federal
awarding agencies and pass-through entities and is not intended to be and should not be used
by anyone other than these specified parties.
Oklahoma City, Oklahoma
October 5, 2010
Independent Auditors’ Report on Compliance with
Requirements Applicable to Each Major Program and on Internal
Control Over Compliance in Accordance With OMB Circular A-133
and on the Schedule of Expenditures of Federal Awards
Board of Regents
Western Oklahoma State College
Altus, Oklahoma
Compliance
We have audited the compliance of Western Oklahoma State College (the “College”) with the
types of compliance requirements described in the U.S. Office of Management and Budget
(OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal
programs for the year ended June 30, 2010. The College’s major federal programs are identified
in the summary of auditors’ results section of the accompanying schedule of findings and
questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants
applicable to each of its major federal programs is the responsibility of the College’s
management. Our responsibility is to express an opinion on the compliance of Western
Oklahoma State College based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally
accepted in the United States of America; the standards applicable to financial audits contained
in Government Auditing Standards issued by the Comptroller General of the United States of
America; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Those standards and OMB Circular A-133 require that we plan and perform the
audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a
major federal program occurred. An audit includes examining, on a test basis, evidence about
the College’s compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion. Our audit does not provide a legal determination of the College’s
compliance with those requirements.
In our opinion, Western Oklahoma State College complied, in all material respects, with the
requirements referred to above that are applicable to each of its major federal programs for the
year ended June 30, 2010.
50
51
Internal Control Over Compliance
The management of the College is responsible for establishing and maintaining effective
internal control over compliance with requirements of laws, regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered the
College’s internal control over compliance with requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures for
the purpose of expressing our opinion on compliance, but not for the purpose of expressing an
opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the College’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type
of compliance requirement of a federal program will not be prevented, or detected and
corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be deficiencies, significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses, as defined above.
Schedule of Expenditures of Federal Awards
We have audited the basic financial statements of the College as of and for the year ended June
30, 2010, and have issued our report thereon dated October 5, 2010. Our audit was performed
for the purpose of forming an opinion on the basic financial statements taken as a whole. The
accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by OMB Circular A-133 and is not a required part of the basic
financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
52
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This report is intended solely for the use of the Board of Regents, management and federal
awarding agencies and pass-through entities and is not intended to be and should not be used
by anyone other than these specified parties.
Oklahoma City, Oklahoma
October 5, 2010
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
WESTERN OKLAHOMA STATE COLLEGE
Year Ended June 30, 2010
Federal
CFDA
Number Expenditures
U.S. Department of Education
Student Financial Aid Cluster
Federal Pell Grant Program 84.063 $ 2,914,511
Federal Supplemental Educational Opportunity Grants 84.007 23,800
Federal Work Study Program 84.033 90,121
Federal Family Education Loan Program 84.032 2,053,923
Federal Academic Competiveness Grant Program 84.375 95,780
Total Student Financial Aid Cluster 5,178,135
TRIO Program Cluster
Upward Bound 84.047 287,699
Student Support Services 84.042A 282,272
Total TRIO Program Cluster 569,971
Congressionally-directed Grant for Nursing Equipment 84.116Z 175,180
Congressionally-directed Grant for Technology Upgrades 84.116Z 90
Passed through the Oklahoma State Department of
Education: Carl Perkins Program 84.051 40,709
Total U.S. Department of Education 5,964,085
Oklahoma State Regents for Higher Education
State Fiscal Stabilization Fund-Education State Grants (ARRA) 84.394 ARRA 437,693
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families 93.558 139,509
Child Development Associative Initiative 93.575 126,242
Total U.S. Department of Health and Human Services 265,751
TOTAL EXPENDITURES OF FEDERAL AWARDS $ 6,667,529
See notes to schedule of expenditures of federal awards.
Federal Grantor/Pass-through Grantor/Program Title
53
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
54
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Schedule of Expenditures of Federal Awards is presented on the accrual basis of
accounting, which is the basis used by Western Oklahoma State College to present the basic
financial statements. Under the accrual basis, expenditures are recognized when the related
liability is incurred.
NOTE B--FEDERAL FAMILY EDUCATION LOAN PROGRAM
The College participates in the Federal Family Education Program, Federal CFDA number
84.032 (the “Program”), which includes the Federal Stafford Loan Program, Federal Parents
Loans for Undergraduate Students, and Federal Supplemental Loans for Students. The
Program does not require the College to draw down cash; however, the College is required to
perform certain administrative functions under the Program. Failure to perform such functions
may require the College to reimburse the loan guarantee agencies.
NOTE C--SUBRECIPIENTS
During the year ended June 30, 2010, the College did not provide any federal awards to
subrecipients.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
55
Section I--Summary of Auditors’ Results
Financial statements
Type of auditors’ report issued: Unqualified
Internal control over financial reporting:
 Material weakness(es) identified? yes X no
 Significant deficiency(ies) identified? yes X none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major programs:
 Material weakness(es) identified? yes X no
 Significant deficiency(ies) identified? yes X none reported
Type of auditors' report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of Circular A-133? yes X no
Identification of major programs:
CFDA Number
Student Financial Aid Cluster *
State Fiscal Stabilization Fund-Education State Grant (ARRA) 84.394 ARRA
Congressionally Directed Grant for Nursing Equipment 84.116Z
Program
* Refer to the Schedule of Expenditures of Federal Awards for CFDA numbers related to these
programs.
Dollar threshold used to distinguish between type A and type B programs: $300,000
Auditee qualified as low-risk auditee? X yes no
SCHEDULE OF FINDINGS AND QUESTIONED COSTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
56
Section II--Findings Required to be Reported in Accordance with Government Auditing Standards:
None to report for the June 30, 2010 period.
Section III--Findings Required to be Reported in Accordance with OMB Circular A-133:
None to report for the June 30, 2010 period.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
57
No matters are reportable.

WESTERN OKLAHOMA
STATE COLLEGE
June 30, 2010
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
AUDITED FINANCIAL STATEMENTS
Independent Auditors’ Report ................................................................................................................. 1
Management’s Discussion and Analysis ................................................................................................ 3
Statements of Net Assets ......................................................................................................................... 16
Statements of Revenues, Expenses, and Changes in Net Assets ....................................................... 17
Statements of Cash Flows ....................................................................................................................... 18
Notes to Financial Statements ................................................................................................................ 20
REPORT REQUIRED BY GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ..................................................... 48
REPORTS REQUIRED BY OMB CIRCULAR A-133
Independent Auditors’ Report on Compliance with Requirements Applicable to Each
Major Program and on Internal Control over Compliance in Accordance With OMB
Circular A-133 and on the Schedule of Expenditures of Federal Awards .................................... 50
Schedule of Expenditures of Federal Awards ...................................................................................... 53
Notes to Schedule of Expenditures of Federal Awards ...................................................................... 54
Schedule of Findings and Questioned Costs ........................................................................................ 55
Summary Schedule of Prior Audit Findings ........................................................................................ 57
Independent Auditors’ Report
Board of Regents
Western Oklahoma State College
Altus, Oklahoma
We have audited the accompanying statements of net assets of Western Oklahoma State College
(the “College”), a component unit of the State of Oklahoma, as of June 30, 2010 and 2009, and
the related statements of revenues, expenses, and changes in net assets and statements of cash
flows for the year then ended. These financial statements are the responsibility of the College’s
management. Our responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of the College’s discretely presented
component unit, the Western Oklahoma State College Foundation, Inc. Those financial
statements were audited by another auditor, whose report thereon has been furnished to us,
and in our opinion, insofar as they relate to the amounts included for the Foundation, are based
on the report of the other auditor.
We conducted our audits in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General for the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The financial statements of
the Foundation were audited by other auditors and were not audited in accordance with
Government Auditing Standards. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes,
assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit and
the report of the other auditor provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditor, the financial statements
referred to above present fairly, in all material respects, the respective financial position of
Western Oklahoma State College and its discretely presented component unit, Western
Oklahoma State College Foundation, Inc. as of June 30, 2010 and 2009, and the respective
changes in financial position and, where applicable, cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.
1
2
In accordance with Government Auditing Standards, we have also issued our report dated
October 5, 2010, on our consideration of the College’s internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the internal control over financial reporting and compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
Management’s Discussion and Analysis, as listed in the Table of Contents, is not a required part
of the basic financial statements, but is supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the supplementary information. However, we did not audit the
information and express no opinion on it.
Oklahoma City, Oklahoma
October 5, 2010
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis
Years Ended June 30, 2010, 2009 and 2008
3
The discussion and analysis of Western Oklahoma State College’s (the “College”) financial
statements provides an overview of the College’s financial activities for the year ended June 30,
2010. Since this management’s discussion and analysis is designed to focus on current activities
and currently known facts, please read it in conjunction with the College’s basic financial
statements and related footnotes.
FINANCIAL HIGHLIGHTS
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Invested In Capital
Assets
Restricted Unrestricted
Net Assets
2008
2009
2010
The following chart provides a graphical breakdown of total revenues by category for the fiscal
year ended June 30, 2010.
Total Revenues
Operating
Revenues
34%
Other Revenues
8%
Nonoperating
Revenues
58%
In fiscal year ended June 30, 2010, the College’s revenues exceeded expenses, creating an
increase in total net assets of $830,770, which represents a 4.91% increase from that reported in
2009. In Fiscal Year ended June 30, 2009, the College’s revenues exceeded expenses, creating an
increase in total net assets of $488,494, which represents a 2.98% increase from that reported in
2008.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
4
OVERVIEW OF THE FINANCIAL STATEMENTS AND FINANCIAL ANALYSIS
The annual report consists of three basic financial statements: the Statement of Net Assets, the
Statement of Revenues, Expenses, and Changes in Net Assets, and the Statement of Cash Flows.
The Statement of Net Assets and the Statement of Revenues, Expenses, and Changes in Net
Assets report information on the activities of the College as a whole. When revenues and other
support exceed expenses, the result is an increase in total net assets. When the reverse occurs,
the result is a decrease in total net assets. The relationship between revenues and expenses may
be thought of as the College’s operating results.
These two statements report the College’s net assets and changes in total assets. You can think of
the College’s net assets-the difference between assets and liabilities-as one way to measure the
College’s financial health, or financial position. Over time, increases or decreases in the College’s
net assets are an indicator of whether the financial health is improving or deteriorating. You
will need to consider many other non-financial factors, such as the trend and quality of student
applicants, freshman class size, student retention, condition of the buildings and safety of the
campus, to assess the overall health of the institution.
All assets and liabilities included in these two statements are presented using the accrual basis of
accounting, which is similar to the accounting used by most private-sector institutions. All of the
current year’s revenues and expenses are taken into account, regardless of when cash is received
or paid.
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE
The following table of the College’s net assets summarizes the major changes between years:
Increase Percent June 30 Increase Percent
2010 2009 (Decrease) Change 2008 (Decrease) Change
Current assets $ 4,879,078 $ 4,317,379 $ 561,699 13% $ 3,987,083 $ 330,296 8%
Noncurrent assets:
Restricted Cash and
Cash Equivalents 148,066 447,231 (299,165) -67% 645,668 (198,437) -31%
Receivable From
State Agency - 775,359 (775,359) -100% 4,242,733 (3,467,374) -82%
Capital assets, net 18,197,329 17,603,963 593,366 3% 14,014,921 3,589,042 26%
Other 986 1,380 (394) -29% 5,093 (3,713) -73%
Total assets 23,225,459 23,145,312 80,147 0% 22,895,498 249,814 1%
Current liabilities 1,131,482 1,686,469 (554,987) -33% 1,490,295 196,174 13%
Noncurrent liabilities: 4,355,256 4,550,892 (195,636) -4% 4,985,746 (434,854) -9%
Total liabilities 5,486,738 6,237,361 (750,623) -12% 6,476,041 (238,680) -4%
Net assets:
Investment in
capital assets 13,518,301 13,253,389 264,912 2% 12,641,713 611,676 5%
Restricted 143,291 - 143,291 100% 394,626 (394,626) -100%
Unrestricted 4,077,129 3,654,562 422,567 12% 3,383,118 271,444 8%
Total net assets $ 17,738,721 $ 16,907,951 $ 830,770 5% $ 16,419,457 $ 488,494 3%
June 30
Net Assets
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
5
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
The breakdown of operating revenues and expenses for fiscal years ended June 30, 2010, 2009
and 2008 are as follows:
Operating Revenues 2010
Other
Operating
5%
Auxilary
9%
State/Local
Grants
10%
Federal
Grants
20%
Tuition & Fees
56%
Operating Revenues 2009
Other
Operating
5%
Auxilary
9%
State/Local
Grants
10%
Federal
Grants
27%
Tuition &
Fees
49%
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
6
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Operating Revenues 2008
Other
Operating
6%
Auxilary
10%
State/Local
Grants
14%
Federal Grants
25%
Tuition & Fees
45%
Operating Expenses
0 1 2 3 4 5 6 7 8 9 10
Compensation
Contratcual
Supplies
Utilities
Communication
Other
Scholarships
Depreciation
$ in Millions
2008
2009
2010
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
7
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Year Ended
Increase Percent June 30 Increase Percent
2010 2009 (Decrease) Change 2008 (Decrease) Change
Operating revenues:
Tuition & Fees $ 3,046,070 $ 2,276,450 $ 769,620 34% 1,671,498 604,952 36%
Federal and state grants 1,612,957 1,751,226 (138,269) -8% 1,415,913 335,313 24%
Auxillary enterprise charges 483,724 440,531 43,193 10% 350,082 90,449 26%
Other 264,362 254,666 9,696 4% 200,933 53,733 27%
Total Operating Revenues 5,407,113 4,722,873 684,240 14% 3,638,426 1,084,447 30%
Less operating expenses 15,181,049 13,760,072 1,420,977 10% 12,650,204 1,109,868 9%
Net loss from operations (9,773,936) (9,037,199) (736,737) 8% (9,011,778) (25,421) 0%
Nonoperating revenues
(expenses):
State appropriations 5,378,308 5,819,608 (441,300) -8% 5,797,441 22,167 0%
State payments from federal ARR 437,693 - 437,693 100% - -
Federal grants and contracts 2,994,763 1,902,214 1,092,549 57% 1,733,779 168,435 10%
State & local grants and contranc 355,800 361,375 (5,575) -2% 353,542 7,833 2%
On-behalf
appropriations for OTRS 342,859 390,956 (48,097) -12% 397,720 (6,764) -2%
State Regents
Endowment Contributions 80,641 59,237 21,404 36% 57,767 1,470 3%
Interest Revenue 22,665 76,419 (53,754) -70% 297,099 (220,680) -74%
Interest Expense (227,689) (252,057) 24,368 -10% (265,535) 13,478 -5%
Net Nonoperating revenues 9,385,040 8,357,752 1,027,288 12% 8,371,813 (14,061) 0%
Other revenues, expenses,
and gains and losses
Capital grants and gifts 118,495 10,475 108,020 1031% 6,475 4,000 62%
State appropriations restricted
for capital purposes 467,266 467,266 - 0% 663,695 (196,429) -30%
On-behalf OCIA capital leases 633,905 690,200 (56,295) -8% 690,771 (571) 0%
Total Other 1,219,666 1,167,941 51,725 4% 1,360,941 (193,000) -14%
Increase in net assets 830,770 488,494 342,276 70% 720,976 (232,482) -32%
Net assets, beginning 16,907,951 16,419,457 488,494 3% 15,698,481 720,976 5%
Net assets, ending $ 17,738,721 $ 16,907,951 $ 16,419,457
Years Ended June 30
Revenues, Expenses and Changes in Net Assets
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
8
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
June 30, 2010 compared to June 30, 2009 resulted in the following revenue and expenditure
changes:
 Tuition & fees revenues increased by 33.81%. This increase is due to a combination of
several factors. Collections of prior year receivables exceeded management’s estimates by
approximately 7%, out-of-state waivers increased by $832,470 (due to a 95.59% increase in
out-of-state enrollment), and although tuition and fee rates did not increase over the FY 09
fiscal year, total enrollment increased 33.25%. Auxiliary revenues increased by 9.80%,
which represents an decrease of $17,742 in Residence Hall and an increase in student store
of $60,935. Federal Grants & Contracts experienced a decrease of -15.38%, which is mostly
due to the USDA grant that ended FY 09. The overall operating revenues increased by
14.49% over that of FY 09.
 Interest revenue and expense both declined this year. The interest revenue decreased by
70.34%, primarily caused by the decreased interest earnings received on the unexpended
2005 OCIA bond funds. These bond funds were fully spent by October 2009. The interest
earnings on the OCIA bond funds are restricted to the projects that these funds support.
The small decrease in the interest expense is attributed to the OCIA bond payments made
by OCIA on behalf of the College in the amount of $234,634, a decrease of $19,497 from the
prior year.
 The $108,020 increase in the Capital grants and gifts represents the income from two
congressionally directed grants that Western received in FY 2010 that were restricted to
capital expenditures. The funds were used for Nursing Program equipment needs and for
Safety and Security equipment needs on campus.
 The on-behalf contributions to Oklahoma Teacher’s Retirement System represent the
amount of dedicated state revenue from the State’s sales, use and income taxes that are
used as contributions to the Oklahoma Teacher’s Retirement Program (OTRS). For 2010,
the State of Oklahoma contributed 5% of the State’s General Revenue Fund to the OTRS on
behalf of participating employers. The College has estimated the amounts contributed to
the OTRS by the State on its behalf by multiplying the ratio of its covered salaries to total
covered salaries for the OTRS for the year by the applicable percentage of taxes collected
during the year. This amount was $342,859 for FY 2010 and $390,956 for FY 2009, which is
a 12.30% decrease, or $48,097.
 On-behalf capital lease payments decreased by 8.16%, or $56,295 less than previous year’s
numbers, which is the On-Behalf Payment for the interest and principal for the 1999 and
2005 OCIA bond issues.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
9
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
June 30, 2009 compared to June 30, 2008 resulted in the following revenue and expenditure
changes:
 Tuition & fees revenues increased by 32.69%. This increase is due to a combination of
several factors. Collections of prior year receivables exceeded management’s estimates by
approximately 10%, out-of-state waivers increased by $703,000 (due to a 58.97% increase in
out-of-state enrollment), tuition and fee rates increased by 8.6% over the FY 08 fiscal year
and total enrollment increased 12.39%. Auxiliary revenues increased by 25.84%, which
represents an increase of $19,196 in Residence Hall and an increase in student store of
$71,253. Federal Grants & Contracts experienced an increase of 25.84%, due to an increase
in U.S. Department of Agriculture Distance Leaning and Telemedicine Grant in the
amount of $358,000.
 Interest revenue and expense both declined in FY 2009. The interest revenue decreased by
74.28%, primarily caused by the interest earnings received on the unexpended 2005 OCIA
bond funds. This balance is decreasing as the funds are being spent on the bond projects.
The interest earnings on these funds are restricted to the projects that these funds support.
The small decrease in the interest expense is attributed to the OCIA bond payments made
by OCIA on behalf of the College in the amount of $254,131, a decrease of $11,404 from the
prior year.
 The 61% increase in capital grants and gifts is from new gifts to the library holdings.
 The on-behalf contributions to Oklahoma Teacher’s Retirement System represent the
amount of dedicated state revenue from the State’s sales, use and income taxes that are
used as contributions to the Oklahoma Teacher’s Retirement Program (OTRS). For 2009,
the State of Oklahoma contributed 5% of the State’s General Revenue Fund to the OTRS on
behalf of participating employers. The College has estimated the amounts contributed to
the OTRS by the State on its behalf by multiplying the ratio of its covered salaries to total
covered salaries for the OTRS for the year by the applicable percentage of taxes collected
during the year. This amount was $390,956 for FY 2009 and $397,720 for FY 2008, which is
a 1.70% decrease.
 On-behalf capital lease payments maintained at the previous year’s numbers, which is the
On-Behalf Payment for the interest and principal for the 1999 and 2005 OCIA bond issues.
Another way to assess the financial health of an institution is to look at the Statement of Cash
Flows. Its primary purpose is to provide relevant information about the cash receipts and cash
payments of an entity during a period. The Statement of Cash Flows also helps users assess an
entity’s ability to generate future net cash flows, its ability to meet its obligations as they come
due, and its needs for external financing.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
10
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Year Ended
Increase June 30 Increase
2010 2009 (Decrease) 2008 (Decrease)
Cash provided (used) by:
Operating activities $ (8,284,599) $ (7,712,749) $ (571,850) $ (7,008,010) $ (704,739)
Noncapital
financing activities 9,186,895 8,142,111 1,044,784 7,942,634 199,477
Capital and related (503,854) (684,350) 180,496 (972,426) 288,076
financing activities
Investing activities 22,665 76,419 (53,754) 297,099 (220,680)
Net increase in cash and
cash equivalents 421,107 (178,569) 599,676 259,297 (437,866)
Cash and cash equivalents,
beginning 3,746,256 3,924,825 (178,569) 3,665,528 259,297
Cash and cash equivalents,
ending $ 4,167,363 $ 3,746,256 $ 421,107 $ 3,924,825 $ (178,569)
Year Ended June 30
Cash Flows
June 30, 2010 compared to June 30, 2009 resulted in the following cash flow changes:
The College’s liquidity increased during the year. Cash used by operating activities increased
by approximately $572,000 while non-capital financing activities increased due an increase of
grants and contracts by approximately $1,045,000. Cash provided by investing activities
decreased by approximately $54,000, which is represented by a decrease in interest income as a
result of the interest earnings on the unexpended portion of the 2005 OCIA bond proceeds. The
net result of these items is an increase in cash by approximately $600,000.
June 30, 2009 compared to June 30, 2008 resulted in the following cash flow changes:
The College’s liquidity decreased during the year. Cash used by operating activities increased
by approximately $705,000. Non-capital financing activities increased due to a state
appropriations increase of approximately $22,000 and an increase in grants and contracts of
approximately $176,000. Cash provided by investing activities decreased by approximately
$221,000, which is represented by a decrease in interest income as a result of the interest
earnings on the unexpended portion of the 2005 OCIA bond proceeds. The net result of these
items is a decrease in cash by approximately $438,000.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
11
FINANCIAL ANALYSIS OF THE COLLEGE AS A WHOLE (Continued)
Although the Statement of Revenues, Expenses, and Changes in Net Assets shows an increase
in total net assets of approximately $831,000, this is representative of all funds combined.
Management feels that it is important to point out the net change in fund balances for each
individual fund. This is displayed below.
2010 2009 2008
Educational and General Fund $ 482,513 $ 196,381 $ (170,544)
Auxiliary Fund (320,504) 347,758 (12,672)
Restricted Fund 201,736 (270,963) (296,087)
Unexpended Plant Fund 202,117 (388,450) 82,162
Capital Assets 264,908 603,768 1,118,117
Combined Total $ 830,770 $ 488,494 $ 720,976
Summary of Changes in Net Assets by Fund
Because of a deficit in the restricted funds, the Unrestricted Education and General Fund was
reduced by $12,135 in the College’s Statement of Net Assets in 2010. In 2009, because of deficits
in restricted funds, the Unrestricted Educational and General Fund was reduced by $272,695 in
the College’s Statement of Net Assets.
CAPITAL ASSETS AND DEBT ADMINISTRATION
CAPITAL ASSETS
At June 30, 2010, the College has approximately $18.2 million invested in capital assets, net of
accumulated depreciation of $11.8 million. Depreciation charges totaled approximately
$1,101,000 for the current fiscal year, compared to approximately $906,000 for the previous fiscal
year. Details of these assets for the three years are shown below.
2010 2009 2008
Land $ 212,345 $ 212,345 $ 212,345
Infrastructure 2,578,583 756,108 728,715
Land Improvements 993,141 877,035 837,707
Buildings 10,059,923 6,433,666 6,263,108
Furniture, Fixtures, and Equipment 2,643,712 2,400,057 2,301,642
Library Materials 1,709,625 1,807,186 1,871,621
Construction in Progress - 5,117,566 1,799,783
$ 18,197,329 $ 17,603,963 $ 14,014,921
Year Ended June 30
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
12
CAPITAL ASSETS AND DEBT ADMINISTRATION (Continued)
CAPITAL ASSETS (Continued)
Planned capital expenditures for fiscal year ending June 2011 will be budgeted and paid
primarily from Section 13 for the college academic programs. Throughout the year there will be
expenditures from other grant programs like Department of Education Congressionally
Directed Grants for campus safety and security and equipment for the Radiological Technology
Program, Title IV, TANF, and institutional reserve funds.
Section 13 for fiscal year 2011 will expend approximately $467,000 in new funds to include items
such as dorm debt retirement payment and Master Lease debt payment requirements -
$142,000; campus-wide computer technology equipment and software - $150,000; new computer
academic department requests - $50,000; physical plant upgrades for HVAC, carpet & vehicles -
$80,000; and $45,000 is undesignated at this time.
DEBT
At June 30, 2010, the College had $4,550,892 in debt outstanding, compared to $4,985,746
reported June 30, 2009 and $5,455,982 reported June 30, 2008. The table below summarizes
these amounts by type for the current year and the previous two years.
2010 2009 2008
OCIA 1999 Capital Lease Obligations $ - $ 10,705 $ 73,934
OCIA 2005 Capital Lease Obligations 4,458,892 4,847,458 5,220,298
ODFA 2007 Master Lease Obligations 92,000 127,583 161,750
$ 4,550,892 $ 4,985,746 $ 5,455,982
Year Ended June 30
Outstanding Debt
The Oklahoma Capital Bond Authority (OCIA) 1999 capital lease obligations provide that the
College is to make specified monthly payments to OCIA over 10 years. During the years ended
June 30, 2010, 2009 and 2008, OCIA made lease principal and interest payments on behalf of the
College totaling $11,240, $67,452 and $67,660, respectively. These on-behalf payments have
been recorded as restricted state appropriations in the College’s Statement of Revenues,
Expenses, and Changes in Net Assets.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
13
CAPITAL ASSETS AND DEBT ADMINISTRATION (Continued)
DEBT (Continued)
In November 2005, the OCIA issued its OCIA Bond Issue 2005F Series. Of the total bond
indebtedness, the State Regents for Higher Education allocated $6,000,000 to the College.
Concurrently with the allocation, the College entered into a lease agreement with OCIA for
projects being funded by the OCIA bonds. This lease agreement provides for the College to
make specified monthly payments to OCIA over 25 years. The proceeds of the bonds and
subsequent leases are to provide for capital improvements at the College. During the years
ended June 30, 2010, 2009 and 2008, OCIA made lease principal and interest payments on behalf
of the College totaling $622,665, $622,748 and $623,111, respectively.
More detailed information about the College’s outstanding debt is presented in Note E to the
financial statements.
WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.
Western Oklahoma State College Foundation, Inc. (the Foundation) is a legally separate tax-exempt
component unit of the College. The Foundation acts primarily as a fund-raising
organization to supplement the resources that are available to the College in support of its
programs. Although the College does not control the timing and amount of receipts from the
Foundation, the majority of resources, or income thereon, which the Foundation holds and
invests, is restricted to the activities of the College by the donors. Because these restricted
resources held by the Foundation can only be used by, or for the benefit of, the College, the
Foundation is considered a component unit for the College and is discretely presented in the
College’s financial statements.
The key components of the Foundation’s Net Assets are as follows:
2010 2009 2008
Unrestricted $ 809,916 $ 656,978 $ 649,367
Temporarily Restricted 260,243 292,367 311,691
Restricted 3,630,295 3,498,996 3,380,196
More detailed information on the Foundation can be found in the financial statements and in
Note J to the financial statements.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
14
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
The economic declines in the markets, bank failures, foreclosures, unemployment, auto industry
bailouts, etc., have all made for an uncertain future for Western, our state and nation. The
infusion of Federal Stimulus Funds has helped avoid an immediate emergency situation for
colleges and universities in Oklahoma, however, the long term economic future and
stabilization is still very uncertain once the stimulus dollars are no longer available.
Currently monthly targets in regard to receipt of state revenues are reaching the expectations of
the Office of State Finance. For the time being, Western and other institutions of Higher
Education have not been forced to take reductions to their FY 11 allocations. Although in FY 10
Western was unable politically to raise tuition, in FY 11 the restriction was raised with strong
urging to stay within a 5.5% tuition increase. Western’s Board of Regents voted to raise tuition
only by 3.2% to help alleviate the state reductions, at the same time holding the increase to the
student at a minimum. The additional stimulus funding will no longer be available for FY12
and it is likely that Western will have to request at least a minimal tuition increase.
In order to address the future declines in state revenues and the loss of stimulus dollars,
Western is aggressively seeking new revenue streams in three primary areas: (1) on-line course
offerings; (2) expanding the number of students participating in our athletic programs; and, (3)
expanding targeted academic programs that are in high demand areas, i.e. nursing.
On-line course offerings – Western has seen significant growth in providing on-line course
offerings throughout the year and especially during intersession when the demand appears
greatest. Western has expanded these offerings and services in a methodical method to meet
the demands at a pace that will not outpace the need. The intent of these expansions will be to
“fill the gap” with tuition and fee dollars from these on-line courses when the stimulus dollars
are no longer available and the likelihood of new additional state dollars are questionable.
Western has realized some substantial success in this area, with increases of almost 100% in our
out of state student FTE over previous year 2009. It is expected that our growth will begin to
level out in the upcoming years.
Expanding the number of students participating in our athletic programs – Western has
challenged our athletic coaches to enhance the quality and at the same time expand the number
of participants in our athletic programs. Additional scholarship dollars have been provided to
help Western coaches recruit quality athletes, increase the number participating, and compete
with other state institutions in number and size of scholarships. The increased number of
participants has been significant and the revenue generated through tuition and fees by those
additional students who participate in athletics is and will be significant in stabilizing the
income side of our budget.
WESTERN OKLAHOMA STATE COLLEGE
Management’s Discussion and Analysis (Continued)
Years Ended June 30, 2010, 2009 and 2008
15
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE (Continued)
Expanding targeted academic programs that are in high demand areas, i.e. nursing - Western
will continue to seek revenue to help expand and, at least, maintain our current expansion of
our Registered Nursing program. With the conclusion of the Program of Excellence Grant, the
State Regents recognized the need to continue the off campus nursing programs that the
Program of Excellence Grant has supported for the past five years. This will have a significant
impact on Western’s ability to continue and/or expand this important program. Additional
grant dollars will be sought to solidify our current program and to seek new methods of
providing instruction and clinical training at different times and in different formats.
In conclusion, the overall economic outlook remains questionable especially in regard to state
allocations. Western is preparing itself to explore every opportunity to stabilize enrollments
and to acquire the necessary funding to move the institution forward.
STATEMENTS OF NET ASSETS
WESTERN OKLAHOMA STATE COLLEGE
Component Component
Unit Unit
WOSC WOSC
WOSC Foundation, Inc. WOSC Foundation, Inc.
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,019,297 $ 311,956 $ 3 ,299,025 $ 249,932
Interest receivable - 28,704 - 26,447
Accounts receivable, net of allowance
for doubtful accounts 666,369 - 800,439 -
Inventories 193,412 - 217,915 -
Total Current Assets 4,879,078 340,660 4,317,379 276,379
NONCURRENT ASSETS
Restricted cash and cash equivalents 148,066 - 447,231 -
Investments - 4,158,678 - 4,026,649
Receivable from state agency - - 775,359 -
Debt service reserve funds 986 - 1,380 -
Other assets - 85,000 - 85,000
Capital assets, net of accumulated
depreciation 18,197,329 1,269,948 17,603,963 1,318,792
Total noncurrent assets 18,346,381 5,513,626 18,827,933 5,430,441
TOTAL ASSETS 23,225,459 5,854,286 23,145,312 5,706,820
LIABILITIES
CURRENT LIABILITIES
Accounts payable 614,812 - 955,115 -
Accrued interest payable - 3,832 - 3,479
Deposits held in custody for others 41,763 - 22,316 -
Accrued payroll 79,070 - 51,982 -
Accrued compensated absences 71,078 - 80,637 -
Current portion of noncurrent liabilities 195,636 110,000 434,854 105,000
Lease premium, net 129,123 - 141,565 -
Total current liabilities 1,131,482 113,832 1,686,469 108,479
NONCURRENT LIABILITIES, net of current portion
Obligations under capital leases 4,355,256 - 4,550,892 -
Revenue bonds payable - 1,040,000 - 1,150,000
Total noncurrent liabilities 4,355,256 1,040,000 4,550,892 1,150,000
TOTAL LIABILITIES 5,486,738 1,153,832 6,237,361 1,258,479
NET ASSETS
Invested in capital assets, net of related debt 13,518,301 - 1 3,253,389 -
Restricted: - - - -
Expendable
Instruction, scholarships and other - 260,243 - 292,367
Capital projects 143,291 - - -
Nonexpendable - 3,630,295 - 3,498,996
Unrestricted 4,077,129 809,916 3,654,562 656,978
TOTAL NET ASSETS $ 17,738,721 $ 4 ,700,454 $ 16,907,951 $ 4,448,341
See notes to financial statements.
2010 2009
June 30, June 30,
16
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
WESTERN OKLAHOMA STATE COLLEGE
Component Component
Unit Unit
WOSC WOSC
WOSC Foundation, Inc. WOSC Foundation, Inc.
OPERATING REVENUES
Tuition and fees, net of scholarship discounts and
allowances of $3,886,000 and $2,522,000 at
June 30, 2010 and 2009, respectively $ 3,046,070 $ - $ 2,276,450 $ -
Federal grants and contracts 1,091,456 - 1,289,830 -
State and local grants and contracts 521,501 - 461,396 -
Student store, net of scholarship discounts and
allowances of $565,000 and $412,000 at
June 30, 2010 and 2009, respectively 410,426 - 349,491 -
Residence hall, net of scholarship discounts and
allowances of $93,000 and $101,000 at
June 30, 2010 and 2009, respectively 73,298 - 91,040 -
Other operating revenues 264,362 205,000 254,666 205,000
Contributions and donations - 442,630 - 378,808
Interest and dividend income - 96,689 - 164,022
Other investment income - 27,458 - -
Net realized and unrealized investment gains (losses) - 57,017 - (41,132)
TOTAL OPERATING REVENUES 5,407,113 828,794 4,722,873 706,698
OPERATING EXPENSES
Compensation and employee benefits 8,987,505 - 8,562,750 -
Contractual services 530,286 40,173 496,245 37,749
Supplies and materials 1,657,818 - 1,569,175 -
Utilities 448,107 2,513 448,880 1,087
Communication 61,029 - 59,475 -
Bond interest expense - 49,742 - 52,371
Other operating expenses 1,364,182 - 1,344,674 1,000
Scholarships and fellowships 1,031,237 435,409 373,358 458,560
Depreciation expense 1,100,885 48,844 905,515 48,844
TOTAL OPERATING EXPENSES 15,181,049 576,681 13,760,072 599,611
Net income (loss) from Operations (9,773,936) 252,113 (9,037,199) 107,087
Nonoperating revenues (expenses)
State appropriations 5,378,308 - 5,819,608 -
State payments from federal ARRA revenues 437,693 - - -
Federal grants and contracts 2,994,763 - 1,902,214 -
State and local grants and contracts 355,800 - 361,375
On-behalf contributions to Oklahoma Teachers'
Retirement System 342,859 - 390,956 -
Endowment contributions 80,641 - 59,237 -
Return on investments 22,665 - 76,419 -
Interest expense (227,689) - (252,057) -
Other nonoperating expenses - - - -
NET NONOPERATING REVENUES 9,385,040 - 8,357,752 -
Income (loss) before other revenues,
expenses, gains, or losses (388,896) 252,113 (679,447) 107,087
Capital grants and gifts 118,495 - 10,475 -
State appropriations restricted for capital purposes 467,266 - 467,266 -
On-behalf payments for OCIA capital leases 633,905 - 690,200 -
Increase in net assets 830,770 252,113 488,494 107,087
NET ASSETS, BEGINNING OF YEAR 16,907,951 4,448,341 16,419,457 4,341,254
NET ASSETS, END OF YEAR $ 17,738,721 $ 4,700,454 $ 16,907,951 $ 4,448,341
See notes financial statements.
2010 2009
Year Ended June 30, Year Ended June 30,
17
STATEMENTS OF CASH FLOWS
WESTERN OKLAHOMA STATE COLLEGE
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees $ 2,859,415 $ 2,235,203
Grants and contracts 1,846,067 1,528,926
Student store 411,616 339,985
Residence hall 73,298 91,040
Other operating receipts 411,097 225,350
Payments to employees for salaries and benefits (8,627,117) (8,173,050)
Payments to suppliers (5,258,975) (3,960,203)
NET CASH USED BY OPERATING ACTIVITIES (8,284,599) (7,712,749)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
State appropriations 5,378,308 5,819,608
State payments from federal ARRA revenues 437,693 -
Grants and contracts 3,350,563 2,263,589
Federal Family Education Loans received 2,053,923 1,934,893
Federal Family Education Loans disbursed (2,053,923) (1,934,893)
Gifts for other than capital purposes 20,331 58,914
NET CASH PROVIDED BY
NONCAPITAL FINANCING ACTIVITIES 9,186,895 8,142,111
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Cash paid for capital assets (1,705,793) (4,578,352)
Capital appropriations received 467,266 467,266
Interest paid on capital debt and leases (5,103) (6,471)
Proceeds from capital leases 775,359 3,467,374
Repayments of capital debt and leases (35,583) (34,167)
NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (503,854) (684,350)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 22,665 76,419
NET CASH PROVIDED BY INVESTING ACTIVITIES 22,665 76,419
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 421,107 (178,569)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,746,256 3,924,825
CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,167,363 $ 3,746,256
See notes to financial statements.
June 30
Year Ended
18
STATEMENTS OF CASH FLOWS--Continued
WESTERN OKLAHOMA STATE COLLEGE
2010 2009
RECONCILIATION OF NET OPERATING LOSS TO CASH
USED BY OPERATING ACTIVITIES
Net loss from operations $ (9,773,936) $ (9,037,199)
Adjustments to reconcile net operating loss to
net cash provided (used) by operating activities
Depreciation expense 1,100,885 905,515
Net loss on disposal of capital assets 130,037 94,272
On-behalf contributions to Oklahoma
Teachers' Retirement System 342,859 390,956
Changes in assets and liabilities
Accounts receivable 194,380 (302,369)
Inventories 24,503 (7,736)
Accounts payable and accrued
expenses (293,768) 236,484
Accrued compensated absences (9,559) 7,328
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (8,284,599) $ (7,712,749)
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO THE STATEMENTS OF NET ASSETS
Current assets
Cash and cash equivalents $ 4,019,297 $ 3,299,025
Noncurrent assets
Restricted cash and cash equivalents 148,066 447,231
$ 4,167,363 $ 3,746,256
NONCASH CAPITAL AND RELATED FINANCING ITEMS
On-behalf interest paid by OCIA $ 234,634 $ 254,131
Amortization of bond issuance cost 394 3,713
Amortization of lease premium (12,442) (12,258)
$ 222,586 $ 245,586
See notes to financial statements.
Year Ended
June 30
19
NOTES TO FINANCIAL STATEMENTS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
20
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations: Western Oklahoma State College (the “College”) is a two-year state
supported college, located in Altus, Oklahoma, operating under the jurisdiction of the Board of
Regents of Western Oklahoma State College and the Oklahoma State Regents for Higher
Education. The College is accredited by the North Central Association of Colleges and Schools.
The College is a component unit of the State of Oklahoma and is included in the general-purposes
financial statements of the State of Oklahoma.
Reporting Entity: The financial reporting entity, as defined by Governmental Accounting
Standards Board (“GASB”) Statement No. 14, The Financial Reporting Entity, includes the
accounts and funds of the College.
The Western Oklahoma State College Foundation, Inc. (the “Foundation”) is a legally separate
tax-exempt component unit of the College. The Foundation acts primarily as a fund-raising
organization to supplement the resources that are available to the College in support of its
programs. The eleven member board of trustees of the Foundation is self-perpetuating and
consists of nine rotating board members, one permanent trustee, and one non-voting exoficio
board member. Although the College does not control the timing and amount of receipts from
the Foundation, the majority of resources, or income thereon, that the Foundation holds and
invests are restricted to the activities of the College by the donors. Because these restricted
resources held by the Foundation can only be used by, or for the benefit of the College, the
Foundation is considered a component unit of the College and is discretely presented in the
College’s financial statements as required by GASB Statement No. 39, Determining Whether
Certain Organizations are Component Units.
During the years ended June 30, 2010 and 2009, respectively, the Foundation distributed
$257,216 and $267,407 in support to the College for both restricted and unrestricted purposes.
Complete financial statements for the Foundation can be obtained from Western Oklahoma
State College Foundation, Inc., 2801 North Main Street, Altus, Oklahoma 73521.
Financial Statement Presentation and Basis of Accounting: The College’s financial statements
are presented in accordance with the requirements of GASB Statement No. 34, Basic Financial
Statements and Management’s Discussion and Analysis for State and Local Governments, and GASB
Statement No. 35, Basic Financial Statements and Management’s Discussion and Analysis for Public
College and Universities. Under GASB Statements No. 34 and 35, the College is required to
present a statement of net assets classified between current and noncurrent assets and liabilities,
a statement of revenues, expenses and changes in net assets, with separate presentation for
operating and nonoperating revenues and expenses, and a statement of cash flows using the
direct method.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
21
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Financial Statement Presentation and Basis of Accounting--Continued: For financial reporting
purposes, the College is considered a special-purpose government engaged only in business-type
activities. Accordingly, the College’s financial statements have been presented using the
economic resources measurement focus and the accrual basis of accounting. Under the accrual
basis, revenues are recognized when earned, and expenses are recorded when an obligation has
been incurred. All significant intra-agency transactions have been eliminated.
The College has the option to apply all Financial Accounting Standards Board (“FASB”)
pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The
College has elected to not apply FASB pronouncements issued after the applicable date.
Cash Equivalents: For purposes of the statements cash flows, the College considers all highly
liquid investments with an original maturity of three months or less to be cash equivalents.
Funds invested through the State Treasurer’s Cash Management Program are considered cash
equivalents.
Deposits and Investments: The College accounts for its investments at fair value, as determined
by quoted market prices, in accordance with GASB Statement No. 31 Accounting and Financial
Reporting for Certain Investments and for External Investment Pools. In accordance with GASB
Statement No. 40, Deposit and Investment Risk Disclosures, the College has disclosed its deposit
and investment policies related to the risks identified in GASB Statement No. 40. Changes in
unrealized gains (losses) on the carrying value of the investments are reported as a component
of investment income in the statements of revenues, expenses, and changes in net assets.
Inventories: Inventories consist of books and supplies held for resale at the bookstore, which
are valued at the lower of cost (first-in, first-out basis) or market.
Accounts Receivable: Accounts receivable consists of tuition and fee charges to students and to
auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in
the State of Oklahoma. Student accounts receivable are carried at the unpaid balance of the
original amount billed to students, less an estimate made for doubtful accounts based on a review
of all outstanding amounts. Management determines the allowance for doubtful accounts by
identifying troubled accounts and by using historical experience applied to an aging of accounts.
Student accounts receivable are written off for financial reporting purposes when deemed
uncollectible.
Recoveries of student accounts receivable previously written off are credited to the allowance for
doubtful accounts when received.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
22
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Accounts Receivable--Continued: A student account receivable is considered to be past due if any
portion of the receivable balance is outstanding after the end of the semester.
Other receivables include amounts due from federal, state and local governments, or private
sources, in connection with reimbursement of allowable expenditures made pursuant to the
College’s grants and contracts. Other accounts receivable also include the distribution from the
Oklahoma State Regents’ endowment trust fund and amounts due from the Oklahoma Capital
Improvement Authority (“OCIA”) for proceeds from the capital bond improvement program
allocated to the College. No allowance for doubtful accounts has been provided for other
receivables.
Noncurrent Cash and Investments: Cash and investments that are externally restricted to make
debt service payments, maintain sinking or reserve funds, or to purchase capital or other
noncurrent assets, are classified as noncurrent assets in the statements of net assets.
Capital Assets: Capital assets are recorded at cost at the date of acquisition, or fair market value
at the date of donation in the case of gifts. For equipment, the College’s capitalization policy
includes all items with a unit cost of $500 or more, and an estimated useful life of greater than
one year. Renovation to buildings, infrastructure, and land improvements that significantly
increase the value or extend the useful life of the structure are capitalized. Routine repairs and
maintenance are charged to operating expense in the year in which the expense was incurred.
Depreciation is computed using the straight-line method over the estimated useful lives of the
assets, generally 50 years for buildings, 25-50 years for infrastructure and land improvements,
and 7 to 20 years for library materials and equipment.
Compensated Absences: Employee vacation pay is accrued when earned by employees. The
liability and cost incurred during the year are recorded as accrued expenses in the statements of
net assets and compensation expense in the statements of revenues, expenses, and change in net
assets.
Noncurrent Liabilities: Noncurrent liabilities include principal amounts of capital lease
obligations with contractual maturities greater than one year.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
23
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Net Assets: The College’s net assets are classified as follows:
Invested in capital assets, net of related debts: This represents the College’s total investment
in capital assets, net of outstanding debt obligations related to those capital assets. To the
extent debt has been incurred but not yet expended for capital assets, such amounts are not
included as a component of invested in capital assets, net of related debt.
Restricted-expendable: Restricted expendable net assets include resources in which the
College is legally or contractually obligated to spend resources in accordance with restriction
imposed by external third parties.
Unrestricted: Unrestricted net assets represent resources derived from student tuition and
fees, state appropriations, and sales and services of educational departments and auxiliary
enterprises. These resources are used for transactions relating to the educational and general
operations of the College, and may be used for discretion of the governing board to meet
current expenses for any purpose. These resources also include auxiliary enterprises, which
are substantially self-supporting activities that provide services for students, faculty and staff.
The College’s unrestricted net assets were designated for the following purposes at June 30:
2010 2009
Educational and general operations $ 2,324,295 $ 1,581,224
Auxiliary enterprises and other operating activities 1,752,834 2,073,338
Total unrestricted net assets $ 4,077,129 $ 3,654,562
When an expense is incurred that can be paid using either restricted or unrestricted resources,
the College’s policy is to first apply the expense toward restricted resources, and then toward
unrestricted resources.
Classification of Revenues: The College has classified its revenues as either operating or
nonoperating revenues according to the following criteria:
Operating Revenues: Operating revenues include activities that have the characteristics of
exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and
allowances, (2) sales and services of auxiliary enterprises, net of scholarship discounts and
allowances, and (3) certain federal, state and local grants and contracts.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
24
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Classification of Revenues--Continued:
Nonoperating revenues: Nonoperating revenues include activities that have the
characteristics of nonexchange transactions, such as gifts and contributions, student aid
revenues, and other revenue sources that are defined as nonoperating revenues by GASB
Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and
Governmental Entities That Use Proprietary Fund Accounting, and GASB Statement No. 34,
such as state appropriations and investment income.
Scholarship Discounts and Allowances: Student tuition and fee revenues, and certain other
revenues from students, are reported net of scholarship discounts and allowances in the
statements of revenues, expenses, and changes in net assets. Scholarship discounts and
allowances are the difference between the stated charge for goods and services provided by the
College, and the amount that is paid by students and/or third parties making payments on the
students’ behalf. Certain governmental grants, such as Pell grants, and other federal, state or
nongovernmental programs, are recorded as nonoperating revenues in the College’s financial
statements. To the extent that revenues from such programs are used to satisfy tuition and fees
and other student charges, the College has recorded a scholarship discount and allowance.
Income Taxes: The College, as a political subdivision of the State of Oklahoma, is exempt from
federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. However,
the College may be subject to income taxes or unrelated business income under Internal Revenue
Code Section 511(a)(2)(b).
Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The significant estimates used in the
preparation these financial statements include the depreciation of capital assets and the
allowance for doubtful accounts for accounts receivable.
Reclassification: Certain amounts in the 2009 financial statements have been reclassified to
conform to the current year presentation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
25
NOTE B--DEPOSITS AND INVESTMENTS
Custodial Credit Risk - Deposits: Custodial credit risk is the risk that in the event of a bank
failure, the College’s deposits may not be returned or the College will not be able to recover
collateral securities in the possession of an outside party. Generally, the College deposits its
funds with the Office of the State Treasurer (“OST”) and those funds are pooled with funds of
other state agencies and then, in accordance with statutory limitations, are placed in financial
institutions or invested as the OST may determine, in the states’ name. State statutes require the
OST to ensure that all state funds are either insured by Federal Deposit Insurance, collateralized
by securities held by the cognizant Federal Reserve Bank, or invested in U.S. government
obligations. The OST’s responsibilities include receiving and collateralizing the deposit of State
funds, investing State funds in compliance with statutory requirements, and maintaining
adequate liquidity to meet the cash flow needs of the State and all its funds and agencies. If the
College deposits funds directly with financial institutions, those funds must be insured by
Federal Deposit Insurance or collateralized by securities held by the cognizant Federal Reserve
Bank in the College’s name. Some deposits with the OST are placed in the OST’s internal
investment pool OK INVEST. OK INVEST pools the resources of all state funds and agencies
and invests them in (a) U.S. treasury securities which are explicitly backed by the full faith and
credit of the U.S. government; (b) U.S. agency securities which carry an implicit guarantee of the
full faith and credit of the U.S. government; (c) money market mutual funds which participants
in investments, either directly or indirectly, in securities issued by the U.S. treasury and/or
agency and repurchase agreements relating to such securities; and (d) investments related to tri-party
repurchase agreements which are collateralized at 102% and, whereby, the collateral is
held by a third party in the name of OST.
At June 30, 2010 and 2009, the carrying amounts of all College deposits with the OST were
$4,167,363 and $3,746,256 respectively. Of funds on deposit with the OST, amounts invested in
OK INVEST total $595,262 in 2010 and $757,401 in 2009.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
26
NOTE B--DEPOSITS AND INVESTMENTS--Continued
For financial reporting purposes, deposits with the OST that are invested in OK INVEST are
classified as cash equivalents. The distribution of deposits in OK INVEST are as follows:
Cost Market Value
U.S. agency securities $ 228,080 $ 231,910
Money market mutual fund 52,104 52,104
Certificates of Deposit 33,857 33,858
Tri-party repurchase agreements 38,175 38,174
Mortgage Backed Agency Securities 210,591 219,741
Municipal Bonds 12,826 13,752
Foreign Bonds 2,386 2,359
U.S. treasury obligations 17,243 18,252
Totals $ 595,262 $ 610,150
OK INVEST Portfolio
At June 30, 2010
Cost Market Value
U.S. agency securities $ 333,338 $ 343,327
Money market mutual fund 59,717 59,717
Certificates of Deposit 48,272 48,272
Tri-party repurchase agreements 59,161 59,161
Mortgage Backed Agency Securities 171,743 173,824
Municipal Bonds 12,180 12,280
Foreign Bonds 1,443 1,443
U.S. treasury obligations 71,547 74,047
Totals $ 757,401 $ 772,071
OK INVEST Portfolio
At June 30, 2009
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
27
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Agencies and funds that are considered to be part of the State’s reporting entity in the State’s
Comprehensive Annual Financial Report are allowed to participate in OK INVEST. Oklahoma
statues and the OST establish the primary objectives and guidelines governing the investment
of funds in OK INVEST. Safety, liquidity, and return on investment are the objectives which
establish the framework for the day to day OK INVEST management with an emphasis on
safety of the capital and the probable income to be derived and meeting the State and it’s funds
and agencies’ daily cash flow requirements. Guidelines in the Investment Policy address credit
quality requirements, diversification percentages and specify the types and maturities of
allowable investments, and the specifics regarding these policies can be found on the OST
website at http://www.treasurer.state.ok.us/. The State Treasurer, at his discretion, may
further limit or restrict such investments on a day to day basis. OK INVEST includes a
substantial investment in securities with an overnight maturity as well as in U.S. government
securities with a maturity of up to ten years. OK INVEST maintains an overall weighted
average maturity of less than two years. Participants in OK INVEST maintain an interest in its
underlying investments and, accordingly, may be exposed to certain risks. As stated in the OST
information statement, the main risks are interest rate risk, credit/default risk, liquidity risk,
and U.S. government securities risk. Interest rate risk is the risk that during periods of rising
interest rates, the yield and market value of the securities will tend to be lower than prevailing
market rates; in periods of falling interest rates, the yield will tend to be higher. Credit/default
risk is the risk that an issuer or guarantor of a security, or a bank or other financial institution
that has entered into a repurchase agreement, may default on its payment obligations.
Liquidity risk is the risk that OK INVEST will be unable to pay redemption proceeds within the
stated time period because of unusual market conditions, an unusually high volume of
redemption requests, or other reasons. U.S. Government securities risk is the risk that the U.S.
government will not provide financial support to U.S. government agencies, instrumentalities
or sponsored enterprises if it is not obligated to do so by law. Various investment restrictions
and limitations are enumerated in the State Treasurer’s Investment Policy to mitigate those
risks; however, any interest in OK INVEST is not insured or guaranteed by the State of
Oklahoma, the Federal Deposit Insurance Corporation or any other government agency.
Interest Rate Risk: At June 30, 2010, the College does not have any investments. The College
does not have a formal policy that limits investment maturities as a means of managing its
exposure to fair value losses arising from increasing interest rates.
Concentration of Credit Risk: The College places no limit on the amount the College may invest
in any one issuer. However, the majority of the investments are in mutual funds and
investments guaranteed by the U.S. Government.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
28
NOTE C--ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at June 30:
2010 2009
Student tuition and fees $ 715,188 $ 528,531
Auxillary enterprises and other operating activities 30,568 31,759
Contributions and gifts 115,406 55,096
Federal, state, and private grants and contracts 318,530 551,640
1,179,692 1,167,026
Less allowance for doubtful accounts (513,323) (366,587)
Accounts receivable, net of allowance
for doubtful accounts $ 666,369 $ 800,439
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
29
NOTE D--CAPITAL ASSETS
Following are the changes in capital assets for the years ended June 30, 2010 and 2009:
Beginning Ending
Balance Additions Transfers Retirements Balance
Capital assets not being depreciated
Land $ 212,345 $ - $ - $ - $ 212,345
Construction-in-progress 5,117,566 664,632 (5,782,198) - -
Total capital assets not being
depreciated $ 5,329,911 $ 664,632 $ (5,782,198) $ -$ 212,345
Other capital assets
Non-major infrastructure networks $ 1,170,187 $ 85,361 $ 1,798,189 $ - $ 3,053,737
Land improvements 1,720,796 22,225 144,108 - 1,887,129
Buildings 11,536,263 95,795 3,839,901 - 15,471,959
Furniture, fixtures, and equipment 6,807,641 915,754 - (285,227) 7,438,168
Library materials 2,014,835 40,521 - (105,673) 1,949,683
Total other capital assets 23,249,722 1,159,656 5,782,198 (390,900) 29,800,676
Less accumulated depreciation
Non-major infrastructure networks 414,079 61,075 - - 475,154
Land improvements 843,761 50,227 - - 893,988
Buildings 5,102,597 309,439 - - 5,412,036
Furniture, fixtures and equipment 4,407,584 647,735 - (260,863) 4,794,456
Library materials 207,649 32,409 - - 240,058
Total accumulated depreciation 10,975,670 1,100,885 - (260,863) 11,815,692
Other capital assets, net $ 12,274,052 $ 58,771 $ 5,782,198 $ (130,037) $ 17,984,984
Capital asset summary
Capital assets not being depreciated $ 5,329,911 $ 664,632 $ (5,782,198) $ - $ 212,345
Other capital assets 23,249,722 1,159,656 5,782,198 (390,900) 29,800,676
Total capital assets 28,579,633 1,824,288 - (390,900) 30,013,021
Less accumulated depreciation 10,975,670 1,100,885 - (260,863) 11,815,692
Capital assets, net $ 17,603,963 $ 723,403 $ -$ (130,037) $ 18,197,329
Year Ended June 30, 2010
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
30
NOTE D--CAPITAL ASSETS--Continued
Beginning Ending
Balance Additions Transfers Retirements Balance
Capital assets not being depreciated
Land $ 212,345 $ - $ - $ - $ 212,345
Construction-in-progress 1,799,783 3,692,287 (374,504) - 5,117,566
Total capital assets not being
depreciated $ 2,012,128 $ 3,692,287 $ (374,504) $ -$ 5,329,911
Other capital assets
Non-major infrastructure networks $ 1,119,390 $ 37,106 $ 13,691 $ - $ 1,170,187
Land improvements 1,637,895 54,651 28,250 - 1,720,796
Buildings 11,134,980 68,720 332,563 - 11,536,263
Furniture, fixtures, and equipment 6,336,697 683,248 - (212,304) 6,807,641
Library materials 2,049,195 52,817 - (87,177) 2,014,835
Total other capital assets 22,278,157 896,542 374,504 (299,481) 23,249,722
Less accumulated depreciation
Non-major infrastructure networks 390,675 23,404 - - 414,079
Land improvements 800,188 43,573 - - 843,761
Buildings 4,871,872 230,725 - - 5,102,597
Furniture, fixtures and equipment 4,035,055 577,738 - (205,209) 4,407,584
Library materials 177,574 30,075 - - 207,649
Total accumulated depreciation 10,275,364 905,515 - (205,209) 10,975,670
Other capital assets, net $ 12,002,793 $ (8,973) $ 374,504 $ (94,272) $ 12,274,052
Capital asset summary
Capital assets not being depreciated $ 2,012,128 $ 3,692,287 $ (374,504) $ - $ 5,329,911
Other capital assets 22,278,157 896,542 374,504 (299,481) 23,249,722
Total capital assets 24,290,285 4,588,829 - (299,481) 28,579,633
Less accumulated depreciation 10,275,364 905,515 - (205,209) 10,975,670
Capital assets, net $ 14,014,921 $ 3,683,314 $ -$ (94,272) $ 17,603,963
Year Ended June 30, 2009
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
31
NOTE D--CAPITAL ASSETS--Continued
The cost and related accumulated depreciation of assets held under capital lease obligations was
as follows at June 30,
Land Construction
Buildings Equipment Improvements in Progress Total
Cost $ 3 ,524,754 $ 1,167,520 $ 1,692,189 $ 761,047 $ 7,145,510
Less accumulated
depreciation 9 9,631 682,657 33,844 108,160 924,292
$ 3 ,425,123 $ 484,863 $ 1,658,345 $ 652,887 $ 6,221,218
2010
Land Construction
Buildings Equipment Improvements in Progress Total
Cost $ 1 82,100 $ 1,167,520 $ 647,650 $ 4,521,161 $ 6,518,431
Less accumulated
depreciation 2 9,136 565,298 77,718 - 672,152
$ 1 52,964 $ 602,222 $ 569,932 $ 4,521,161 $ 5,846,279
2009
NOTE E--NONCURRENT LIABILITIES
Noncurrent liability activity for the College was as follows for the years ended June 30:
Balance at Balance at Amounts
June 30, June 30, Due Within
2009 Additions Reductions 2010 One Year
Capital lease obligations
OCIA 1999 capital lease obligations $ 10,705 $ - $ (10,705) - $ -
OCIA 2005F capital lease obligations 4,847,458 - (388,566) 4,458,892 158,469
ODFA 2007 master lease obligations 127,583 - (35,583) 92,000 37,167
Total capital lease obligations 4,985,746 - (434,854) 4,550,892 195,636
Other noncurrent obligations
Compensated absences 80,637 119,667 (129,226) 71,078 71,078
Total noncurrent liabilities $ 5,066,383 $ 119,667 $ (564,080) $ 4,621,970 $ 266,714
2010
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
32
NOTE E--NONCURRENT LIABILITIES--Continued
Balance at Balance at Amounts
June 30, June 30, Due Within
2008 Additions Reductions 2009 One Year
Capital lease obligations
OCIA 1999 capital lease obligations $ 73,934 $ - $ (63,229) $ 10,705 $ 10,705
OCIA 2005F capital lease obligations 5,220,298 - (372,840) 4,847,458 388,566
ODFA 2007 master lease obligations 161,750 - (34,167) 127,583 35,583
Total capital lease obligations 5,455,982 - (470,236) 4,985,746 434,854
Other noncurrent obligations
Compensated absences 73,309 122,914 (115,586) 80,637 80,637
Total noncurrent liabilities $ 5,529,291 $ 122,914 $ (585,822) $ 5,066,383 $ 515,491
2009
Oklahoma Capital Improvement Authority Lease Obligations: In September 1999, the
Oklahoma Capital Improvement Authority (“OCIA”) issued its OCIA Bond Issues, 1999 Series
A, B and C. Of the total bond indebtedness, the State Regents for Higher Education allocated
$500,000 to the College. Concurrently with the allocation, the College entered into three
individual lease agreements with OCIA, representing the three projects being funded through
the OCIA bonds. Each of the agreements provides for the College to make specified monthly
payments to OCIA over 10 years. The proceeds of the bonds and subsequent leases are to
provide for capital improvements at the College. This obligation was repaid in full during the
fiscal year ended June 30, 2010.
In November 2005, the OCIA issued its OCIA Bond Issue 2005F Series. Of the total bond
indebtedness, the State Regents for Higher Education allocated $6,000,000 to the College.
Concurrently with the allocation, the College entered into a lease agreement with OCIA for
projects being funded by the OCIA bonds. Each of the agreements provides for the College to
make specified monthly payments to OCIA over 10 years. The proceeds of the bonds and
subsequent leases are to provide for capital improvements at the College.
During the years ended June 30, 2010 and 2009, OCIA made principal and interest payments
totaling $633,905 and $690,200, respectively, on behalf of the College. These on-behalf payments
have been recorded as restricted state appropriations in the College’s statements of revenues,
expenses, and changes in net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
33
NOTE E--NONCURRENT LIABILITIES--Continued
Oklahoma Development Finance Authority Master Lease Program: In 2007, the Oklahoma
Development Finance Authority (“ODFA”) issued the Oklahoma State System of Higher
Education Master Lease Revenue Bonds, Series 2007. Of the total bond indebtedness, the State
Regents for Higher Education allocated $181,000 to the College. The proceeds of the bonds are
to provide for capital improvements at the College.
Future minimum lease payments related to the College’s obligations under its various capital
lease obligations are as follows:
Year Ending June 30: Prinicpal Interest Total
2011 $ 195,636 $ 221,637 $ 417,273
2012 203,837 213,397 417,234
2013 188,151 204,438 392,589
2014 180,065 195,986 376,051
2015 188,877 187,493 376,370
2016-2020 921,048 808,333 1,729,381
2021-2025 1,174,715 554,710 1,729,425
2026-2030 1,498,563 230,816 1,729,379
Total $ 4,550,892 $ 2,616,810 $ 7,167,702
NOTE F--RETIREMENT PLAN
The College’s academic and nonacademic personnel are covered by the Oklahoma Teachers’
Retirement System, which is a State of Oklahoma public employees retirement system. The
College does not maintain the accounting records, hold the investments for, or administer this
plan.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
34
NOTE F--RETIREMENT PLAN--Continued
Oklahoma Teachers’ Retirement System
Plan Description: The College contributes to the Oklahoma Teachers’ Retirement System
(“OTRS”), a cost-sharing multiple-employer defined benefit pension plan sponsored by the
State of Oklahoma. OTRS provides defined retirement benefits based on members’ final
compensation, age and term of service. In addition, the retirement plan provides for benefits
upon disability and to survivors upon the death of eligible members. The benefit provisions
are established and may be amended by the legislature of the State of Oklahoma. Title 70 of the
Oklahoma Statutes, Sections 17-101 through 17-120, assigns the authority for management
and operation of the plan to the Board of Trustees of OTRS. The OTRS issues a publicly
available financial report that includes financial statements and supplementary information
for OTRS. That report may be obtained by writing to Teachers’ Retirement System of
Oklahoma, P.O. Box 53524, Oklahoma City, Oklahoma 73152, or by calling (405) 521-2387.
Funding Policy: The College is required to contribute a fixed percentage of annual
compensation on behalf of active members. The employer contribution rate of 9.5%, which
increased from 9% in January 2010, is applied to annual compensation, and is determined by
state statute. The contribution rate was 8.5%-9% in fiscal year 2009 and 8.35% in fiscal year 2008.
Employees’ contributions are also determined by state statute. For all employees, the
contribution rate was 7% of covered salaries and fringe benefits in 2010, 2009 and 2008,
respectively. These contributions were made directly by the College for 2010, 2009 and 2008.
The College’s contributions to the OTRS for the years ended June 30, 2010, 2009 and 2008
were approximately $971,000, $934,000 and $843,000, respectively. These contributions
included the College’s statutory contribution and the share of the employees’ contributions
paid directly by the College.
The State of Oklahoma is also required to contribute to the OTRS on behalf of the participating
employers. For 2010, the State of Oklahoma contributed 5% of state revenues from sales and
use taxes and individual income taxes, to the OTRS on behalf of participating employers.
The College has estimated the amounts contributed to the OTRS by the State of Oklahoma
on its behalf by multiplying the ratio of its covered salaries to total covered salaries for the
OTRS for the year by the applicable percentage of taxes collected during the year. For the
years ended June 30, 2010 and 2009, the total amounts contributed to the OTRS by the State of
Oklahoma on behalf of the College were approximately $343,000 and $391,000, respectively.
These on-behalf payments have been recorded as nonoperating revenues and operating
expenses in the statements of revenues, expenses, and changes in net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
35
NOTE G--FUNDS HELD IN TRUST BY OTHERS
Oklahoma State Regents’ Endowment Trust Funds
In connection with the Oklahoma State Regents’ Endowment Program (the “Endowment
Program”), funds are invested by the Oklahoma State Regents on behalf of the College. These
funds are not recognized in the College’s statement of net assets. At June 30, 2010 and 2009, the
funds totaled approximately $556,000 and $497,000, respectively. The College is entitled to
receive an annual distribution of earnings on these funds. Distributions to be received totaled
approximately $26,000 and $28,000 at June 30, 2010 and 2009, respectively.
NOTE H--RELATED PARTY TRANSACTIONS
The College is the beneficiary of the Western Oklahoma State College Foundation, Inc. (the
“Foundation”), which provides support for the College by way of scholarships and other direct
resources. The College contracts with the Foundation to provide limited services and office
space in exchange for the support the College receives. The College provides support to the
Foundation through employee services and office space.
In July 1998, the Foundation issued revenue bonds through the Jackson County Public Finance
Authority to construct a student housing facility (the “Housing Facility”) on property owned by
the College. Concurrently with the issuance of these bonds, the College entered into a Lease and
Development Agreement (the”Lease Agreement”) and an Operations and Maintenance
Agreement (the “Operation Agreement”). In connection with the Lease Agreement, the College
agreed to pay a development fee to the Foundation, and further agreed to rent the real property
upon which the Housing Facility was to be constructed. The term of the lease agreement was
for 50 years beginning July 1, 1998, and provided for the Foundation to pay the College $100 per
year in rent expense.
The Operation Agreement provided that the College would be responsible for the management
and operations of the Housing Facility, and in exchange for the services provided by the College
to the Foundation, the Foundation would pay the College the sum of $925 per semester for each
student residing in the Housing Facility. The Operations Agreement automatically renewed
each fiscal year but could be terminated by the College or the Foundation. In connection with
the Operations Agreement, the College’s Board of Regents had verbally agreed to incur the
expenses and debt service in excess of revenues collected. The agreement was reviewed
annually by the College, and was subject to Board approval for future years. Effective July 1,
2002, the Operations Agreement was terminated, as described below.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
36
NOTE H--RELATED PARTY TRANSACTIONS--Continued
Effective July 1, 2002, the College entered into a Student Housing Facility Lease Agreement (the
“Student Housing Lease Agreement”) with the Foundation. The Operations Agreement was
terminated as a result of this agreement. Under the Student Housing Lease Agreement, the
Foundation and the College agreed that the College would lease all of the Foundation’s rights
and interests in the Housing Facility for $205,000 per year. The initial lease term of the Student
Housing Lease Agreement was from July 1, 2002 through June 30, 2003. The College and the
Foundation must agree to future lease terms.
NOTE I--COMMITMENTS AND CONTINGENCIES
The College is exposed to various risks of loss from torts; theft of, damage to, and destruction of
assets; errors and omissions; employee injuries and illnesses; natural disasters; and employee
health, life, and accident benefits. Commercial insurance coverage is purchased for claims
arising from such matters other than torts, property, and workers’ compensation. Settled claims
have not exceeded this commercial coverage in any of the three preceding years.
The College, along with other state agencies and political subdivisions, participates in the State
of Oklahoma Risk Management Program and the state insurance fund entity risk pool currently
operating as a common risk management and insurance program for its members. The College
pays an annual premium to the pools for its torts, property, and workers’ compensation
insurance coverage. The Oklahoma Risk Management Pool’s (the “Pool”) governing agreement
specifies that the Pool will be self-sustaining through member premiums and will reinsure
through commercial carriers for claims in excess of specified stop-loss amounts.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
37
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.
The following are significant disclosures of the Foundation:
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations: Western Oklahoma State College Foundation, Inc., a nonprofit
organization, was formed in 1974 for the benefit of Western Oklahoma State College (the
College) in aid of charitable, benevolent educational, scientific and literary purposes.
The purposes of the Foundation are strengthened by the worthy accomplishments that are a
part of the history of the Foundation.
The role of the Foundation is to provide the financial support that will enable the College to
achieve expanded goals and fulfill higher purposes that otherwise are not possible on limited
funding.
The Foundation leaders recognize the potential for the Foundation and realize greater
support can be attained for the College as it reaches increasingly significant level of
educational leadership.
The Foundation seeks continuous support from individuals, business firms, corporations, civic
groups, foundations, service organizations and bequests of wills. As the Foundation grows,
the College educational programs grow. The Foundation provides a variety of opportunities
to share in the future development of the College and its continuing Commitment to Excellence.
Significant accounting and reporting policies applied in the preparation of the accompanying
financial statements are as follows:
Basis of Accounting: The Foundation uses the accrual basis of accounting, whereby revenues
are recognized when earned and expenses when incurred. Expenses incurred but not paid are
represented by a liability on the statement of financial position. Other revenues are recognized
when received or earned. Net assets represent the cumulative excess of revenues recognized
over expenses incurred.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
38
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--Continued
Financial Statement Presentation: The accompanying financial statements are presented in
accordance with Financial Accounting Standards Board (FASB) in its Statements of Financial
Accounting Standards (SFAS) No. 116, Accounting for Contributions Received and Contributions
Made, and Statement No. 117, Financial Statement for Not-for-Profit Organizations, which
requires the Foundation to report information regarding its financial position and activities
according to the three classes of net assets as follows:
Unrestricted net assets – Net assets that are not subject to donor imposed stipulations.
Temporarily restricted net assets – Net assets subject to donor imposed stipulations
that may or will be met, either by actions of the Foundation and/or the passage of
time. When a restriction expires, temporarily restricted net assets are reclassified to
unrestricted net assets.
Permanently restricted net assets – Net assets subject to donor imposed stipulations
that they be maintained permanently by the Foundation. The donors of these assets
permit the Foundation to use all or part of the income earned on any related
investments for general or specific purpose.
Investments: The Foundation has adopted SFAS No. 157, Fair Value Measurements with
respect to financial assets and liabilities. SFAS No.157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value measurements.
Fair value under SFAS No. 157 is defined as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. SFAS No. 157 establishes fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value into three broad levels, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs that are derived principally from or corroborated by observable
market data;
Level 3 – Inputs that are unobservable and significant to overall fair measurement.
Investments which are contributed to the Foundation are carried at their fair market value
at the time of donation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
39
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--Continued
Capital Assets: Capital assets are recorded at cost at the date of acquisition. Depreciation is
computed using the straight-line method over the estimated useful life of the asset, which is
generally 37.5 years for buildings.
Capital assets that are contributed to the Foundation are carried at their fair market value at
the time of the donation.
Statement of Cash Flows: In accordance with FASB Statement No. 95, Statement of Cash
Flows, as amended by FASB Statement No.17, the accompanying financial statements
include a statement of cash flows, which is presented using the direct method. For purposes
of the statements of cash flows, cash and cash equivalents include checking and time
deposits with maturities of 90 days or less.
Estimates: The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates, the significant
estimates used in the preparation of these financial statements are depreciation and the
allowance for investment revaluation.
Income Taxes: The Foundation is an organization exempt from income taxes under Section
501 (c) (3) of the Internal Revenue Code. As such, no provision has been made for federal or
state income taxes. Federal and State informational tax returns have been filed as required.
Concentration of Risk: The Foundation maintains its cash accounts and certificates of
deposit at several commercial banks. Cash accounts and certificates of deposit at each bank
are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 and
additional insurance to cover any of those amounts that may exceed the $250,000 FDIC
insurance.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
40
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE A: DESCRIPTION OF THE ENTITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--Continued
Evaluation of Subsequent Events: In May 2009, the FASB issued SFAS No. 165, Subsequent
Events. SFAS No. 165 established general standards of accounting for and disclosure of
events that occur after the statement of financial position date, but before financial
statements are issued or are available to be issued. SFAS No. 165 requires disclosure of the
date through which an entity has evaluated subsequent events and the basis for that date.
Accordingly, the Foundation adopted SFAS No. 165 as of June 30, 2010 and evaluated its
financial statement for subsequent events through August 19, 2010. The Foundation is not
aware of any such events which would require recognition or disclosure in the financial
statements.
NOTE B: WOSC STUDENT FACILITIES REVENUE BOND SERIES 2008
In July 1998, Western Oklahoma State College Foundation, Inc. (Foundation) entered into a
lease and development agreement with the Board of Regents of Western Oklahoma State
College (the Board) to lease a portion of the Western Oklahoma State College campus for the
purpose of constructing a student housing facility. The Board agreed to pay the
development fee of $150,000 in order to obtain the financing. In addition, the Board entered
into an operation and maintenance agreement whereby the Board agreed to operate and
maintain the student housing facility. In July 2002, the Board terminated the original
operation and maintenance agreement and entered into a lease agreement providing for an
annual lease of $205,000. The Board agreed to pay for all maintenance, utilities, insurance
and repairs necessary to operate the student housing facility.
In June 2008, the WOSC Student Facilities Revenue Bonds Series 1998 were retired with the
proceeds from the issue of the WOSC Student Facilities Revenue Bonds Series 2008 in the
amount of $1,360,000 with interest due on June 1 and December 1 and with principal payments
annually. The first principal and interest payments commenced on December 1, 2008.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
41
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE B: WOSC STUDENT FACILITIES REVENUE BOND SERIES 2008--Continued
The bonds mature during the fiscal year ending June 30, in the following manner:
Principal Interest Total
2011 $ 110,000 $ 45,977 $ 155,977
2012 115,000 42,127 157,127
2013 120,000 37,958 157,958
2014 120,000 33,478 153,478
2015 125,000 28,798 153,798
2016-2019 560,000 61,625 621,625
$ 1,150,000 $ 249,963 $ 1,399,963
NOTE C: CAPITAL ASSETS
Capital assets consist of the following at June 30:
2010 2009
Student housing facility $ 1,807,234 $ 1,807,234
Less accumulated depreciation (537,286) (488,442)
$ 1,269,948 $ 1,318,792
Depreciation expense included in the accompanying financial statements for the years
ended June 30, 2010 and 2009 was $48,844 each year.
NOTE D: INVESTMENTS AND ALLOWANCE FOR INVESTMENT LOSS
The Foundation has adopted Statement of Financial Accounting Standards (SFAS) No. 124,
Accounting for Certain Investments Held by Not-for-Profit Organizations. Under SFAS No. 124,
investments in marketable securities with readily determinable fair market values are
reported at their fair market value in the statement of net assets. Realized and unrealized
gains and losses are included in the statement of activities as gains or losses in market
revaluation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
42
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE D: INVESTMENTS AND ALLOWANCE FOR INVESTMENT GAIN (LOSS)--
Continued
Types of investments are as follows at June 30:
2010 2009
U.S. government agencies $ 3,497 $ 3,866
Certificates of deposits 2,789,172 2,689,870
Money market funds 36,660 472,078
Mutual funds 948,019 434,628
Annuities 251,000 251,000
Commercial paper - 101,894
Real estate investment trusts (REIT) 169,846 169,846
Total investments 4,198,194 4,123,182
Allowance for market revaluation (39,516) ( 96,533)
Fair market value (carrying value) $ 4,158,678 $ 4,026,649
NOTE E: ENDOWMENT DISCLOSURE
The Foundation’s endowment consists of 90 individual donor restricted funds which are
managed and controlled by the Foundation and were established for scholarships. As
required by generally accepted accounting principles, net assets associated with endowment
funds are classified and reported based on the existence or absence of donor imposed
restrictions. All of the endowment funds held by the Foundation are managed and
controlled by the Foundation in accordance with the following policies.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
43
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE E: ENDOWMENT DISCLOSURE--Continued
Interpretation Of Relevant Law (Continued)
The Board of Trustees of the Foundation have interpreted the State Prudent Management of
Institutional Funds Act (“SPMIFA”) as requiring the preservation of the fair value of the
original gift as of the gift date of the donor restricted endowment funds absent explicit
donor stipulations to the contrary. As a result of this interpretation, the Foundation
classifies as permanently restricted net assets: (a) the original value of the gifts donated to
the permanent endowment; (b) the original value of subsequent gifts to the permanent
endowment; and (c) accumulation to the permanent endowment made in accordance with
the direction of the applicable donor gift instrument at the time the accumulation is added
to the fund. The remaining portion of the donor restricted endowment fund that is not
classified in permanently restricted net asset is classified as temporarily restricted net assets
until those amounts are appropriated for expenditure by the Foundation in the manner
consistent with the standard of prudence prescribed by SPMIFA. In accordance with
SPMIFA, the Foundation considers the following factors in making a determination to
appropriate or accumulate donor restricted endowment funds.
(1) The duration and preservation of the funds;
(2) The purpose of the Foundation and donor restricted endowment fund;
(3) General economic conditions;
(4) Possible effect of inflation and deflation;
(5) The expected total return from income and appreciation of investments;
(6) Other resources of the Foundation;
(7) The investment policies of the Foundation;
Endowment net asset composition by type of funds as of June 30, 2010:
Temoprarily Permanently
Endowments Unrestricted Restricted Restricted Total
Donor restricted endowments $ - $ 260,243 $ 3,630,295 $ 3,890,538
Board designated endowments 663,142 - - 663,142
Total Funds Invested $ 6 63,142 $ 260,243 $ 3,630,295 $ 4,553,680
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
44
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE E: ENDOWMENT DISCLOSURE--Continued
Interpretation Of Relevant Law (Continued)
Changes in endowment net assets for the year ended June 30, 2010:
Unrestricted
Board Temporarily Permanently
Designated Restricted Restricted Total
Endowment net assets,
beginning of year $ 560,139 $ 292,367 $ 3,498,996 $ 4,351,502
Investment return
Investment income 11,829 93,103 12,415 117,347
Net realized and unrealized
gain on investments 57,017 - - 57,017
Total investment return 68,846 93,103 12,415 174,364
Contributions 34,157 113,060 118,884 266,101
Appropriation of endowment
assets for expenditure - (238,287) - (238,287)
Endowment net assets,
end of year $ 663,142 $ 260,243 $ 3,630,295 $ 4,553,680
Funds with Deficiencies
From time to time, the fair value of assets associated with individual donor restricted
endowment funds may fall below the level that donor or SPMIFA requires the Foundation
to retain as a fund of perpetual duration. In accordance with generally accepted accounting
principles, the allowance reported in unrestricted net assets which is a reduction in fair
market value of invested endowment funds is $39,516 and $96,533 at June 30, 2010 and 2009,
respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
45
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE E: ENDOWMENT DISCLOSURE--Continued
Return Objectivities and Risk Parameters
The Foundation has adopted investment and spending policies for endowment assets that
attempt to provide a predictable stream of funding to programs supported by its
endowments while seeking to maintain the purchasing power of the endowment assets.
Endowment assets include those assets of the donor restricted funds that the Foundation
must hold in perpetuity or for a donor specified period as well as board designated funds.
Under this policy, as approved by the Board of Trustees, the endowment assets are invested
with the primary objective of growth and a secondary objective of current income. The asset
allocation policies reflect and are consistent with the investment objectives and risk
tolerances expressed through the investment policy. These policies, developed after
examining the historical relationships of risk and return among asset classes, are designed to
provide the highest probability of meeting or exceeding the return objectives at the lowest
level of risk. Actual returns in any given year may vary from this amount.
Spending Policy
The Foundation has a policy of appropriating for distribution each year amounts up to, but
not to exceed actual investment performance for the year.
How The Investment Objectives Relate to the Spending Policy
Since the Foundation has a policy of designating unrestricted funds each year for
investment, it feels that this policy protects the purchasing power of the endowments. In
light of the current market fluctuations and the future needs of the Foundation, it evaluates
the spending policy annually to ensure that it remains in accordance with the long term
objectives of the Foundation.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
46
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE F: FAIR VALUE MEASUREMENTS
The Foundation has no liabilities measured at fair value on a recurring basis. Assets measured
at fair value on a recurring basis are classified within the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
U.S. government agencies $ - $ 3,497 $ - $ 3,497
Certificates of deposit 2,804,469 - - 2,804,469
Money market funds 36,660 - - 36,660
Mutual funds 890,329 - - 890,329
Annuities 251,664 - - 251,664
Real estate investment trusts 172,059 - - 172,059
Investments $ 4,155,181 $ 3,497 $ - $ 4,158,678
Level 1 Level 2 Level 3 Total
U.S. government agencies $ - $ 3,866 $ - $ 3,866
Certificates of deposit 2,652,843 - - 2,652,843
Money market funds 472,078 - - 472,078
Mutual funds 388,592 - - 388,592
Annuities 251,905 - - 251,905
Commercial paper - 87,519 - 87,519
Real estate investment trusts 169,846 - - 169,846
Investments $ 3,935,264 $ 91,385 $ - $ 4,026,649
As Of June 30, 2010
As Of June 30, 2009
Following is a description of the methodologies used for instruments measured at fair value
on a recurring basis:
When quoted prices are available in an active market, securities are classified within Level 1
of the hierarchy. Investments classified as Level 1 include cash and cash equivalents,
common and preferred stocks, and mutual funds. Other investments, such as government
agency, corporate bonds, and municipal securities are classified within Level 2 of the
hierarchy and are independently valued by nationally recognized, third-party pricing
services, and provided by the investment manager to the Foundation. Certificates of
deposit values are based on yield curves, interest rates, and other relevant factors.
NOTES TO FINANCIAL STATEMENTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
47
NOTE J--WESTERN OKLAHOMA STATE COLLEGE FOUNDATION, INC.--Continued
NOTE G: SILVER STATUES
The Foundation maintains various silver statues. These statues are maintained for public
exhibition rather than financial gain. On June 30, 2010 and 2009, these statues had a value of
approximately $85,000. These statues are protected, kept unencumbered, cared for, and
preserved.
NOTE H: CONTRIBUTIONS AND DONATIONS
The following is a breakdown of the contributions and donations received in 2010 and their
respective categories by restriction:
Temoprarily Permanently
Contributions and donations Unrestricted Restricted Restricted Total
Endowments $ 4,238 $ 103,756 $ 111,137 $ 2 19,131
Sustaining membership account 18,010 - - 18,010
Pass through funds - 174,501 - 174,501
Presidents partners 23,241 - 7 ,747 30,988
Total contributions and donations $ 45,489 $ 278,257 $ 118,884 $ 442,630
As of June 30, 2010
NOTE K--ACCOUNTING STANDARDS ISSUED NOT YET ADOPTED
In 2010, GASB issued Statement No. 59, Financial Instruments Omnibus. GASB No. 59 provides
updates and improvements to existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools for which
significant issues have been identified in practice. The requirements of this Statement are
effective for financial statements for periods beginning after June 15, 2010. Earlier application in
encouraged. Management has determined that this Statement will have no effect on the
College’s financial condition or results of operations.
Independent Auditors’ Report on Internal Control Over
Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Board of Regents
Western Oklahoma State College
Altus, Oklahoma
We have audited the financial statement of Western Oklahoma State College (the “College”), a
component unit of the State of Oklahoma, as of and for the years ended June 30, 2010 and 2009,
and have issued our report thereon dated October 5, 2010. Our report was modified to include
a reference to other auditors. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial
audits in Government Auditing Standards, issued by the Comptroller General of the United States
of America. Other auditors audited the financial statements of the Western Oklahoma State
College Foundation, Inc. (the “Foundation”), the College��s discretely presented component
unit, as described in our report on the College’s financial statements. The financial statements
of the Foundation were not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the College’s internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the College’s internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of the College’s internal control
over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the College’s financial statements will not be
prevented, or detected and corrected on a timely basis.
48
49
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies
in internal control over financial reporting that might be deficiencies, significant deficiencies or
material weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the College’s financial statements are
free of material misstatements, we performed tests of compliance with certain provisions of
laws, regulations, contracts and grant agreements, and other matters, noncompliance with
which could have a direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance and other matters that are required to be reported
under Government Auditing Standards.
This report is intended solely for the use of the Board of Regents, management and federal
awarding agencies and pass-through entities and is not intended to be and should not be used
by anyone other than these specified parties.
Oklahoma City, Oklahoma
October 5, 2010
Independent Auditors’ Report on Compliance with
Requirements Applicable to Each Major Program and on Internal
Control Over Compliance in Accordance With OMB Circular A-133
and on the Schedule of Expenditures of Federal Awards
Board of Regents
Western Oklahoma State College
Altus, Oklahoma
Compliance
We have audited the compliance of Western Oklahoma State College (the “College”) with the
types of compliance requirements described in the U.S. Office of Management and Budget
(OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal
programs for the year ended June 30, 2010. The College’s major federal programs are identified
in the summary of auditors’ results section of the accompanying schedule of findings and
questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants
applicable to each of its major federal programs is the responsibility of the College’s
management. Our responsibility is to express an opinion on the compliance of Western
Oklahoma State College based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally
accepted in the United States of America; the standards applicable to financial audits contained
in Government Auditing Standards issued by the Comptroller General of the United States of
America; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Those standards and OMB Circular A-133 require that we plan and perform the
audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a
major federal program occurred. An audit includes examining, on a test basis, evidence about
the College’s compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion. Our audit does not provide a legal determination of the College’s
compliance with those requirements.
In our opinion, Western Oklahoma State College complied, in all material respects, with the
requirements referred to above that are applicable to each of its major federal programs for the
year ended June 30, 2010.
50
51
Internal Control Over Compliance
The management of the College is responsible for establishing and maintaining effective
internal control over compliance with requirements of laws, regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered the
College’s internal control over compliance with requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures for
the purpose of expressing our opinion on compliance, but not for the purpose of expressing an
opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the College’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type
of compliance requirement of a federal program will not be prevented, or detected and
corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be deficiencies, significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses, as defined above.
Schedule of Expenditures of Federal Awards
We have audited the basic financial statements of the College as of and for the year ended June
30, 2010, and have issued our report thereon dated October 5, 2010. Our audit was performed
for the purpose of forming an opinion on the basic financial statements taken as a whole. The
accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by OMB Circular A-133 and is not a required part of the basic
financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
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* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This report is intended solely for the use of the Board of Regents, management and federal
awarding agencies and pass-through entities and is not intended to be and should not be used
by anyone other than these specified parties.
Oklahoma City, Oklahoma
October 5, 2010
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
WESTERN OKLAHOMA STATE COLLEGE
Year Ended June 30, 2010
Federal
CFDA
Number Expenditures
U.S. Department of Education
Student Financial Aid Cluster
Federal Pell Grant Program 84.063 $ 2,914,511
Federal Supplemental Educational Opportunity Grants 84.007 23,800
Federal Work Study Program 84.033 90,121
Federal Family Education Loan Program 84.032 2,053,923
Federal Academic Competiveness Grant Program 84.375 95,780
Total Student Financial Aid Cluster 5,178,135
TRIO Program Cluster
Upward Bound 84.047 287,699
Student Support Services 84.042A 282,272
Total TRIO Program Cluster 569,971
Congressionally-directed Grant for Nursing Equipment 84.116Z 175,180
Congressionally-directed Grant for Technology Upgrades 84.116Z 90
Passed through the Oklahoma State Department of
Education: Carl Perkins Program 84.051 40,709
Total U.S. Department of Education 5,964,085
Oklahoma State Regents for Higher Education
State Fiscal Stabilization Fund-Education State Grants (ARRA) 84.394 ARRA 437,693
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families 93.558 139,509
Child Development Associative Initiative 93.575 126,242
Total U.S. Department of Health and Human Services 265,751
TOTAL EXPENDITURES OF FEDERAL AWARDS $ 6,667,529
See notes to schedule of expenditures of federal awards.
Federal Grantor/Pass-through Grantor/Program Title
53
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
54
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Schedule of Expenditures of Federal Awards is presented on the accrual basis of
accounting, which is the basis used by Western Oklahoma State College to present the basic
financial statements. Under the accrual basis, expenditures are recognized when the related
liability is incurred.
NOTE B--FEDERAL FAMILY EDUCATION LOAN PROGRAM
The College participates in the Federal Family Education Program, Federal CFDA number
84.032 (the “Program”), which includes the Federal Stafford Loan Program, Federal Parents
Loans for Undergraduate Students, and Federal Supplemental Loans for Students. The
Program does not require the College to draw down cash; however, the College is required to
perform certain administrative functions under the Program. Failure to perform such functions
may require the College to reimburse the loan guarantee agencies.
NOTE C--SUBRECIPIENTS
During the year ended June 30, 2010, the College did not provide any federal awards to
subrecipients.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
55
Section I--Summary of Auditors’ Results
Financial statements
Type of auditors’ report issued: Unqualified
Internal control over financial reporting:
 Material weakness(es) identified? yes X no
 Significant deficiency(ies) identified? yes X none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major programs:
 Material weakness(es) identified? yes X no
 Significant deficiency(ies) identified? yes X none reported
Type of auditors' report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of Circular A-133? yes X no
Identification of major programs:
CFDA Number
Student Financial Aid Cluster *
State Fiscal Stabilization Fund-Education State Grant (ARRA) 84.394 ARRA
Congressionally Directed Grant for Nursing Equipment 84.116Z
Program
* Refer to the Schedule of Expenditures of Federal Awards for CFDA numbers related to these
programs.
Dollar threshold used to distinguish between type A and type B programs: $300,000
Auditee qualified as low-risk auditee? X yes no
SCHEDULE OF FINDINGS AND QUESTIONED COSTS--Continued
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
56
Section II--Findings Required to be Reported in Accordance with Government Auditing Standards:
None to report for the June 30, 2010 period.
Section III--Findings Required to be Reported in Accordance with OMB Circular A-133:
None to report for the June 30, 2010 period.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
WESTERN OKLAHOMA STATE COLLEGE
June 30, 2010
57
No matters are reportable.